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Oil prices rise, bond yields increase as US-Iran ceasefire expires

Oil prices rose and bond yields increased, reducing the gains in stocks as Asian trading began on Tuesday. A truce between Iran and the United States expired and Tehran announced it would shift to a more "fully offensive" military posture.

MSCI's broadest?Asia-Pacific?shares index outside Japan rose 0.8%. The South Korean KOSPI rose more than 3%, as Seoul's market returned from a holiday. The Nikkei fell by 0.3% while S&P500 e-minis futures were flat.

The yield of the 10-year Treasury bond in the United States was up by 0.8 basis points at?4.728%. The 30-year counterpart was up 0.6 basis points at 5.3146%. This is the highest it has been in over a decade.

Analysts at ING wrote that "typically, moves over 4.65% in the 10-year bond rate for the U.S. are followed by soothing words from the Trump administration. These usually focus on an imminent end to the Iran war." This time we are not hearing the same," they said. "In fact the latest indications point to no imminent resolution, as 'the shaky sixty-day truce? came to an end."

The yield on the 10-year Japanese Government Bond rose by 2.5 basis points, to 2.945%. This is a record high for the past three decades.

The S&P 500 fell 0.5% overnight on Wall Street while the Nasdaq Composite fell 0.3% as weak U.S. data, such as an unexpected decline in retail sales, led markets to reduce their bets that the Federal Reserve would soon increase interest rates.

Westpac analysts said in a research report that "markets adopted a risk-off attitude as President Trump reaffirmed his disinterest in extending the ceasefire with Iran. With renewed 'tensions' in the Middle East, oil prices are rising and this is complicating sentiment."

The U.S. Dollar Index, which measures the strength of the greenback against a basket six currencies, was trading?around a low of 99.527% for two months.

The stalemate over Iran has refocused traders on global supply concerns. Oil prices rose by more than $2 Monday. Brent crude futures rose 0.2% to $91.06 per barrel as trading resumed in Asia.

Gold rose 0.1% to $4,420.07 and extended recent gains for a third day in a row.

Bitcoin was up by 0.1% to $64,398.48 while ether rose 0.3% to $1911.40. (Reporting and editing by Sonali Paul; Gregor Stuart Hunter)

(source: Reuters)