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Wall Street stocks rose modestly on Wednesday on hopes for an imminent Greek debt agreement and after data pointed to renewed life in the US economy, while German debt yields climbed after comments from European Central Bank President Mario Draghi.
Greece's international creditors had signalled on Wednesday that they were ready to compromise to avert a default even as Athens warned it might skip an IMF loan repayment due this week.
German bond yields
German 10-year bond yields moved as high as 0.887 per cent, a day after their biggest jump in nearly three years, after the ECB raised its inflation forecast for 2015. Draghi said the central bank saw no reason to adjust its monetary policy stance after a recent rise in bond yields in Europe.
In tandem with higher European yields, ten year US Treasury yields hit their highest since November at 2.3696 per cent.
Private sector hiring
US stocks ended slightly higher, partly lifted by data showing private employers picked up hiring in May, while the rise in bond yields helped lift financial shares. The report comes ahead of the US Labor Department's more comprehensive non-farm payrolls report on Friday.
"The biggest positive about the bond market weakness is that yields going higher is a net positive for all of the financials. Higher yields on fixed income translate into higher rates and that increases the net interest margin for financials," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
The US dollar's recent woes continued, spurred by better-than-expected inflation figures in the euro zone that also battered sovereign debt. It marks the second such jump in both the euro and euro zone sovereign yields in the last six weeks.
The greenback fell 0.53 per cent against a basket of major currencies.
The euro extended gains against the dollar on Wednesday, ending up 1.07 per cent to $1.1271 after hitting a high of $1.1284. The euro has gained more than 3.0 per cent against the greenback in the last two days, its biggest two-day percentage gain since March 2009.
The sell-off in Europe and US government debt and the sharp move in the euro mirrors the activity from mid-April to mid-May. Investors earlier bet heavily on dollar and bond rallies to continue, and have since shifted positions to avoid big losses.
The Dow Jones industrial average rose 64.33 points or 0.36 per cent to 18,076.27, the S&P 500 gained 4.47 points or 0.21 per cent to 2,114.07 and the Nasdaq Composite added 22.71 points or 0.45 per cent to 5,099.23.
MSCI's all-country world index of stock performance in 46 countries was up 0.32 per cent. The pan-European FTSEurofirst 300 stock index closed down 0.12 per cent.
Brent crude settled down $1.69 cents at $63.80 a barrel, and US crude settled off $1.62 at $59.64 a barrel as traders and investors ignored a fifth straight weekly decline in US crude stockpiles to focus instead on a big build in distillates.
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