* U.S. stocks fall, weighed by energy sector, BofA
* Oil sinks 1 percent on rising rig count figures
* U.S., European bond yields fall from highs
(Updates to afternoon trading)
By Dion Rabouin
NEW YORK, Oct 17 Major stock markets around the
world fell on Monday and U.S. and European bond yields slipped
off four-month highs amid uncertainty over the health of the
U.S. stocks fell as declining oil prices pushed energy
stocks down and traders sold Bank of America shares
despite a well-received earnings report from the country's
second-largest bank by assets.
Stocks touched their lows of the day following comments from
Federal Reserve Vice Chairman Stanley Fischer, who said economic
stability could be threatened by low interest rates, but it was
"not that simple" for the Fed to raise rates.
European stocks closed lower across the board with the
pan-European FTSE Eurofirst 300 index down 0.69
"I think we're headed for a bumpy session with earnings
leading the way," said Peter Cardillo, chief market economist at
First Standard Financial in New York. "It's also a jittery
market ahead of the elections and of course the prospects of a
rate hike (by the U.S. Federal Reserve) in December."
The Dow Jones industrial average fell 60.36 points,
or 0.33 percent, to 18,078.02, the S&P 500 lost 6.56
points, or 0.31 percent, to 2,126.42 and the Nasdaq Composite
dropped 13.04 points, or 0.25 percent, to 5,201.12.
A gauge of equity markets around the globe
was down 0.25 percent.
Oil fell around 1 percent as a rising U.S. rig count kept
investors worried about a persisting glut. The energy sector led
all S&P components lower, down 0.75 percent in early trading.
Brent crude futures were down just under 1 percent
at $51.46, with U.S. crude futures at $49.73 per barrel,
down 1.25 percent.
U.S. and European government bonds reversed earlier selling
and rose in price after benchmark 10-year Treasury note yields
hit their highest since June 2 and German and British bonds
touched their highest since late June.
Buying in Treasuries was spurred by bargain-hunting
investors who scooped up government debt that had fallen in
price on Friday following remarks by Federal Reserve Chair Janet
Yellen, analysts said. Yellen had said the central bank may
tolerate inflation above its 2-percent goal.
The rise in prices also followed a sub-par reading from the
New York Fed's gauge on regional business activity in October.
The 10-year U.S. Treasury note rose 7/32 in
price to yield 1.766 percent, falling from a high of 1.814
British 10-year gilt yields were last at 1.126
percent, falling from 1.223 percent in European trading, the
highest since June 20.
German 10-year bunds were last yielding 0.057
percent, falling from 0.104 percent, their highest since June
The U.S. dollar retreated from a seven-month high as some
investors took profit following a recent rally that received a
boost on Friday by Yellen's comments and solid U.S. data.
Safe-haven gold edged up as buyers began to resurface
after a 6 percent fall over the last few weeks.
"Markets are reacting to the possibility that the Fed might
join the Bank of Japan in conducting policy to steepen the yield
curve," Ric Spooner, chief market analyst at CMC Markets in
Sydney, wrote in a note.
"In the Fed's case, this might amount to running the
gauntlet of higher inflation with a very slow pace of monetary
(Editing by Nick Zieminski and Bernadette Baum)