GLOBAL MARKETS-World shares ease as yields and oil ring inflation alarm

* World shares weaken, Nasdaq futures down 2%
* Senate passes $1.9 trillion stimulus
* Dollar gains on euro, yen as U.S. yields race ahead
* Brent hops past $70 for first time since pandemic began
* 2020 asset performance: http://tmsnrt.rs/2yaDPgn
* World FX rates in 2020: http://tmsnrt.rs/2egbfVh

By Danilo Masoni and Wayne Cole
MILAN/SYDNEY, March 8 (Reuters) - World shares dipped on
Monday as the U.S. Senate's passage of a $1.9 trillion stimulus
bill put fresh pressure on Treasuries and tech stocks with lofty
valuations, raising inflation jitters.
These concerns overshadowed the prospect that stimulus would
give another boost to the world's No.1 economy, likely helping
global growth rebound faster from the COVID-19 downturn.
Analysts expect a sharp acceleration in inflation, stoked in
part by the latest spike in oil prices, which on Monday climbed
above $70 for the first time since the pandemic began.
"Between reflation, inflation risk and equity valuations,
there's plenty of reasons for the market to be jittery over the
bond re-pricing," said Natixis strategist Florent Pochon.
"Equity valuations will of course remain a burning issue in
particular for overly rich sectors," he also said, adding
however that sell-offs should be seen as buying opportunities,
given that central banks remain "structurally dovish".
The MSCI world equity index < .MIWD00000PUS> fell 0.1% by
0828 GMT, as gains in European cyclical and travel stocks were
offset by losses in Asia.
Chinese stocks .CSI300 posted their biggest decline in
seven months, down 3.5%, on concerns that Chinese officials
could tighten policy to rein in lofty valuations. Nasdaq futures NQc1 fell 2% in early European trade,
reversing early gains, while S&P 500 futures ESc1 fell 1% as
investors looked past the benefits of the fiscal package.
According to JPMorgan, every $1 trillion of fiscal stimulus
adds around $4-$5 to companies' earnings per share, implying
6-7% upside for the remainder of the year.
Equity investors had taken heart on Friday from U.S. data
showing nonfarm payrolls surged by 379,000 jobs last month,
while the jobless rate dipped to 6.2% in a positive sign for
incomes, spending and corporate earnings. U.S. Treasury Secretary Janet Yellen tried to counter
inflation concerns by noting the true unemployment rate was
nearer 10% and there was still plenty of slack in the labour
market.
Yet yields on U.S. 10-year Treasuries US10YT=TWEB still
hit a one-year high of 1.626% in the wake of the data, and stood
at 1.594% on Monday.
U.S. yields increased a hefty 16 basis points for the week,
while German yields actually dipped 4 basis points.
The European Central Bank meets on Thursday amid talk it
will look at ways to restrain further increases in euro zone
yields.
The diverging trajectory on yields boosted the dollar
against the euro, which fell to a three-month low of $1.1891
EUR= .
BofA analyst Athanasios Vamvakidis argued the potent mix of
U.S. stimulus, faster reopening and greater consumer firepower
was a clear positive for the dollar.
"Including the current proposed stimulus package and further
upside from a second-half infrastructure bill, total U.S. fiscal
support is six times greater than the EU recovery fund," he
said. "The Fed is also supportive with U.S. money supply growing
two times faster than the Eurozone."
The dollar index =USD shot up to levels not seen since
late November and was last at 92.06, well above its February
trough of 89.677.
The U.S. currency also gained on the low-yielding yen,
reaching a nine-month top of 108.63 JPY= , and was last
changing hands at 108.4.
The jump in yields has weighed on gold, which offers no
fixed return, and pushed it down 0.1% at $1,698 an ounce XAU=
and just above a nine-month low.
Oil prices were up the highest levels in more than a year
after Yemen's Houthi forces fired drones and missiles at the
heart of Saudi Arabia's oil industry on Sunday, raising concerns
about production. Prices had already been supported by a decision by OPEC and
its allies not to increase supply in April. O/R
Brent LCOc1 climbed 1.1% to $70.14 a barrel, while U.S.
crude CLc1 rose 1% to $66.8 per barrel.