* Wall Street's "fear gauge" at all-time lows
* Active Fed supporting yields, dollar
By Jamie McGeever
LONDON, May 9 European stocks and bond yields
rose on Tuesday, boosted by historically low stock market
volatility, continuing relief from this weekend's French
presidential election and solid corporate earnings.
Europe's index of leading 300 shares was up 0.4
percent at 1,552 points, Germany's DAX Germany's DAX
rose 0.3 percent, France's CAC 40 and Britain's FTSE 100
added 0.4 percent.
Asian stocks did not perform as well, with China's seventh
consecutive loss - the longest losing streak for four
years - weighing on the region more broadly.
But overnight, the VIX index of implied volatility on the
S&P 500 - the so-called Wall Street "fear gauge" - fell
to its lowest intraday level since December 2006. It closed at
9.77, its lowest closing level since December 1993.
U.S. futures pointed to a slightly higher opening on Wall
Street, which would see the S&P 500 moving even higher
than Monday's record 2,401 points.
"It's calm sailing today for stock markets after the VIX had
its lowest close since 1993," ETX Capital senior markets
analyst, Neil Wilson, said. Victory for business-friendly
centrist Emmanuel Macron in France and earnings were also
supportive for equities, he said.
"So far, there is precious little to halt the rotation from
bonds to stocks," he said.
The FTSEuroFirst hit its highest for nearly two years, and
the index of top 50 euro zone stocks its highest for
18 months. Germany's DAX hugged close to Monday's record high.
Shares in Germany's Commerzbank rose more than 2
percent after the bank posted forecast-beating profits in the
first quarter, and mining companies were among the leading
MSCI's broadest index of Asia-Pacific shares outside Japan
slipped 0.1 percent and Japan's Nikkei
fell 0.26 percent.
The MSCI World index, which touched a record
high overnight, dropped about 0.1 percent.
FED UP, OTHERS STILL
In bond markets the 10-year U.S. Treasury yield rose to
2.394 percent, its highest in a month. The two-year
yield held steady at 1.33 percent, meaning the yield
curve rose to its steepest for more than two weeks.
The yield curve had flattened last week to its lowest since
the U.S. presidential election in November as investors fretted
over the impact higher interest rates will have on the economy.
Another hike in June is almost certain, according to market
pricing, and investors now appear more convinced that the
economy will take that in its stride, which could give the
Federal Reserve more room to carry on tightening policy.
"For the most part, developed country central banks are
pretty static when it comes to monetary policy," Standard Bank's
head of G10 strategy in London, Steve Barrow, said. "Only the
Fed is actively changing interest rates."
This positive sentiment boosted the dollar. It rose 0.3
percent against the yen to 113.65 yen and the euro was
unchanged at $1.0924, again suggesting investors are
reluctant to buy it above $1.10.
The dollar index was up 0.1 percent at 99.18.
In commodities, oil market sentiment swung between optimism
over statements from major oil-producing countries that supply
cuts could be extended into 2018 and lingering concerns over
slowing demand and a rise in U.S. crude output.
U.S. crude rose 0.5 percent to $46.66 a barrel, and
global benchmark Brent also rose 0.5 percent to $49.57.
Copper bounced from the four-month low touched on Monday
after data showed a sharp drop on imports into China, the
world's biggest consumer. London copper rose 0.5 percent
to $5,515 a tonne on Tuesday, after falling to as low as
$5,462.50 on Monday.
Gold recovered from a seven-week trough touched on Monday.
Spot gold rose about 0.1 percent to $1,226.60 an ounce.
(Editing by Louise Ireland)