GLOBAL MARKETS-Stocks climb, bonds fall after Democrats win Senate

* Euro STOXX 600 up 0.3%
* Bonds across world fall, taking cue from U.S. Treasuries
* Dollar languishes near 3-year low
* Commodity, finance, chipmakers lead broad equity gains
* U.S. futures higher

By Tom Wilson and Tom Westbrook
LONDON/SINGAPORE, Jan 7 (Reuters) - Bonds licked their
wounds and stocks rose on Thursday as investors bet Democrat
control of the U.S. Congress would enable President-elect Joe
Biden to borrow and spend heavily, with a bruised dollar
hovering near its lowest in almost three years.
U.S. Treasuries extended their steepest selloff in months
after Democrat victories in two Georgia races handed them narrow
control of the Senate, bolstering President-elect Joe Biden's
power to pass his agenda.
Europe's Euro STOXX 600 .STOXX gained 0.3%, with indexes
in Frankfurt .GDAXI and Paris .FCHI up 0.4% and 0.6%
respectively. Growth-linked sectors from energy .SX7E to
miners .SXPP rallied on the prospects of more U.S. stimulus.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in almost 50 countries, rose 0.3%.
Earlier, MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS rose 0.6% and Japan's Nikkei
.N225 hit its highest since 1990.
Even after risk sentiment was earlier knocked by images of
President Donald Trump's supporters storming Capitol Hill to
attempt to overturn his election defeat, S&P 500 futures ESc1
rose 0.6% as order was restored and Congress returned to work.
It quickly became clear that objections from pro-Trump
Republican lawmakers to Biden's victory in battleground states
would be rejected overwhelmingly, including by most
Republicans.
"For stocks it will be a net positive, for other assets
classes it will be different," said Olivier Marciot, a portfolio
manager at Unigestion said of the Democrat victory.
"The bond moves yesterday were something we hadn't seen for
a long time. The case is for reflation."
Wednesday's bond selloff pushed the yield on benchmark
10-year U.S. Treasuries US10YT=RR , which rises when prices
fall, over 1% for the first time since March. It rose as high as
1.0660% on Thursday. US/
Euro zone government bond yields also edged higher, with
Germany's 10-year Bund yield up slightly to -0.55%. Japanese
government bond prices had also slipped, taking cues from the
U.S. DOLLAR
The ramifications of the Democrat victory played out in
currency markets, too.
The dollar had sunk on the Georgia results to a near-three
year low against a basket of six major currencies =USD , with
traders betting growing U.S. trade and budget deficits would
weigh on the greenback. On Thursday it bounced 0.3% to 89.529.
Against the euro EUR= it hovered near an almost three-year
low of $1.2349, and also languished near recent multi-year
troughs against the Aussie AUD=D3 , kiwi NZD=D3 and Swiss
franc CHF= .
Still, some analysts said rising bond yields may help the
dollar's fortunes.
"Higher Treasury yields should benefit the dollar against
the euro and the yen," said Masafumi Yamamoto, chief currency
strategist at Mizuho Securities in Tokyo.
"However, the dollar will remain weaker against commodity
currencies like the Aussie and emerging market currencies."
Other risk-on assets climbed.
Copper, a barometer for global growth, gained 0.3% MCU3=LX
to hover near an 8-year high.
In Asia, miners Rio Tinto RIO.AX and BHP BHP.AX earlier
surged to all-time peaks, while chipmakers Samsung 005930.KS
and SK Hynix 000660.KS drove South Korean stocks .KS11 to a
record high.
Oil prices held around a 10-month high, basking in the
afterglow of a production cut promised by Saudi Arabia. Brent
crude futures LCOc1 were last up 0.7% to $54.68 a barrel.
Gold XAU= was steady at $1,921 an ounce, and bitcoin
BTC=BTSP firm after hitting a fresh record high of $37,800.
The cryptocurrency has soared over a quarter already this month
after almost quadrupling last year.

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