Stocks rally as investors regain some nerve; Israel conflict rages on

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LONDON, Oct 10 - Global stocks snapped higher on Tuesday, in line with a retreat in bond yields after Federal Reserve officials signaled the recent yield surge could justify caution on interest rates, while oil eased, but violence in the Middle East made for nervy trading.

The rush into perceived safe-haven assets such as the dollar, gold and government bonds at the start of the week eased somewhat, while oil prices, which surged by over 4% at one point on Monday, retreated. "Geopolitical tensions are a huge problem for markets, just because the range of outcomes is very wide and, therefore, unless there is a clear direction of travel and development, it's very hard to decide which way prices should go," Berenberg economist Kallum Pickering said.

THE FED AND YIELDS Government bonds, which investors tend to turn to in times of geopolitical or financial crisis, have witnessed one of their worst routs in years over recent weeks, given the perception that interest rates could stay much higher for much longer - an environment that does not usually favour fixed income assets.

 

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