USA 10-year yields highest since March on China bond holdings fears

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The S&P financial index.SPSY was the best performer among the S&P 500's 11 major sectors with a 0.9 percent rise, helped by gains in Berkshire HathawayBRKa.N, JPMorganJPM.N and Wells FargoWFC.N.

The pan-European STOXX 600 index was down 0.1 per cent while the FTSE edged up 0.2 per cent as a lower sterling helped British dollar earners.

Bitcoin dropped 9.2 percent to $13,517.83 on the Bitstamp exchange, after South Korea's justice minister said a bill was being prepared to ban cryptocurrency trading.

The yield on the benchmark 10-year U.S. Treasury note shot to a 10-month high of 2.59% in London, before retreating later in the day and ending roughly unchanged in NY.

According to Reuters, citing a statement from China's foreign exchange regulator, The State Administration of Foreign Exchange (SAFE), the report on usa bond purchases "could be based on erroneous information".

"China's showing that they have power in the relationship, as anyone who's a buyer of U.S. Treasuries does", said Eric Stein, co-director of global fixed income at Eaton Vance in Boston. "The market seems to have been looking for one-sided news to sell the dollar, this week".

"As long as China continues to export goods to the US on that basis, they'll need to invest dollars in something", said Guy LeBas, chief income strategist at Janney Montgomery Scott LLC in Philadelphia.

The Canadian dollar weakened to its lowest level this year, before recovering, as worries of a USA withdrawal from the North American Free Trade Agreement moderated bets that the Bank of Canada will raise interest rates next week.

The dollar had been on the back foot even before the news report as the Bank of Japan's move to trim its purchases of long-dated government bonds (JGB) this week reverberated across currency markets.

Oil prices extended gains, with U.S. crude futures hitting a three-year high on a tight supply balance due to OPEC-led production cuts and a sharper fall in USA crude inventories.

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A separate probe into Chinese intellectual property practices may also conclude as early as this month, Axios reported, and could result in tariffs on the country's consumer-electronics exports.

Its demand for foreign currency holdings has, over the years, been a key pillar of support for the US Dollar and made a big contribution to keeping US government borrowing costs as low as they have been.

The euro was at $1.1939, up from $1.1935, and at ¥133.46-47, down from ¥133.61.

The largest currency market move has come from the Japanese yen with the USD/JPY sitting up 0.26% at 117.71, recovering after hitting a low of 111.33 earlier in the session.

The yen was buoyed this week after a cut in the Bank of Japan's bond buying on Tuesday fuelled speculation that the central bank could eventually seek to exit from its stimulus later this year, following in the footsteps of other major central banks.

The Gordon Brown example highlights why Commonwealth Bank of Australia is saying Wednesday's reports over China and its US Treasury holdings are unreliable.

Spot gold was up 0.5 per cent at $US1,318.67 an ounce by 1.41 pm Wednesday EST (0541 Thursday AEDT).

China very deliberately holds $1.2 trillion of United States debt and by doing so makes a relatively risk-free investment, while sending the USA a political message that they have a hold on U.S. life-lines, the flow of money into its veins.

Platinum was up 0.9% at 973.60 oz, after hitting a 4-month high at 973.90.