Sterling, bond yields gain as Brexit views shift

By Caroline Valetkevitch

NEW YORK (Reuters) – Sterling and bond yields rose on Friday as traders tried to assess whether the killing of a pro-European Union British lawmaker may change the balance of opinions in Britain’s upcoming referendum on EU membership.

U.S. stocks ended the day with losses, though MSCI’s all-country world stock index <.MIWD00000PUS> was up 0.5 percent.

Campaigning for the June 23 referendum, which somewhat overshadowed this week’s U.S. and Japanese central bank meetings, was put on hold after British Member of Parliament Jo Cox was shot dead on Thursday.

Concerns that a vote by Britain to leave the 28-country bloc would cause turmoil in the global economy and European politics rattled markets and caused the pound to tumble earlier this week.

“This is people adjusting positions because they don’t know what’s going to happen,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. “People are unwinding the ‘risk off’ trades for the most part.”

The pound was last up 1.06 percent against the dollar at $1.4350, after reaching a one-week high of $1.4387 on Friday. On Thursday, it hit a low of $1.4010.

U.S. benchmark Treasury yields rose for the first time in nearly two weeks as investor fears of a British exit from the EU eased somewhat.

The benchmark 10-year Treasury notes fell 16/32 in price to yield 1.618 percent. It was the first increase in 10-year yields since June 6.

U.S. STOCKS SLIP, OIL UP

Shares of Apple Inc dragged down major U.S. stock indexes ahead of the EU referendum in Britain.

Worries over the vote undercut the S&P 500’s momentum after the benchmark index came within about 12 points of its record closing high last week.

“We’re just going to be tied to those anxieties going up or down between now and the Thursday vote,” said Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis.

The Dow Jones industrial average <.DJI> was down 57.94 points, or 0.33 percent, at 17,675.16. The S&P 500 <.SPX> lost 6.77 points, or 0.33 percent, at 2,071.22 and the Nasdaq Composite <.IXIC> dropped 44.58 points, or 0.92 percent, to 4,800.34.

For the week, the three major U.S. indexes each posted declines of at least 1 percent. Apple shares fell 2.3 percent. It said its iPhone 6 and 6 Plus were still available for sale in China despite being blocked by Beijing’s intellectual property regulators which said the designs had infringed a Chinese company’s patent.

A rebound in battered bank stocks lifted European shares. The FTSEurofirst 300 <.FTEU3> ended up 1.2 percent.

Oil, which has been a major driver of the sharp swings in global markets this year, also helped shift the mood as it rose for the first time in seven sessions.

Brent crude futures rose $1.98 to settle at $49.17 a barrel, while U.S. crude advanced $1.77 to $47.98.

For the week, Brent was down nearly 3 percent and WTI dropped more than 2 percent.

Gold also advanced, with spot gold up 1.2 percent at $1,293.80 an ounce, supported by a softer dollar.

(Additional reporting by Karen Brettell and Lewis Krauskopf in New York and Marc Jones in London; Editing by Nick Zieminski and Richard Chang)