* Sterling retreats from 5 1/2-month high vs dollar, up vs
yen
* European stocks extend Monday's gains, Wall St edges up
* Brexit vote, Yellen testimony keep investors cautious
* Brent crude oil dips back below $50 a barrel
(Updates with early U.S. market activity, changes dateline,
previous LONDON)
By Edward Krudy
NEW YORK, June 21 (Reuters) - Global stock markets edged
higher on Thursday while sterling reversed gains after hitting a
more than 5 1/2-month high earlier in the day as polls and
surveys showed the United Kingdom's vote on leaving the EU on a
knife-edge.
Mixed trading across asset classes pointed to uneasiness in
markets, investors said, and came after Monday's dramatic surge
in "risk assets," driven by polls showing the chance of the
United Kingdom leaving the EU appearing to lessen.
Oil prices fell nearly $1, dropping back below $50 per
barrel and ending a two-day rally as the latest opinion polls
indicated Thursday's referendum could go either way. But gold, a
safe-haven asset, continued to head lower.
"All eyes are on that vote," said Ian Lyngen, a senior
government bond strategist at CRT Capital in Stamford,
Connecticut.
Fed Chair Janet Yellen said global risks and a U.S. hiring
slowdown warrant a cautious approach to raising interest rates.
Her comments before the Senate Banking Committee seemed to
signal no pressing need for the Fed to raise rates.
The dollar strengthened against a basket of major currencies
.DXY , surging 0.6 percent against the safe-haven yen, which
has retreated this week on indications the campaign for Britain
to stay in the EU has regained momentum.
The MSCI's all-country world stock index .MIWD00000PUS
edged up 0.3 percent after surging 1.7 percent on Monday. Wall
Street stocks as measured by the S&P 500 .SPX rose 0.3
percent, initially pairing some gains after Yellen's cautious
outlook.
The pan-European FTSEurofirst 300 index .FTEU3 added 0.9
percent after surging 3.7 percent on Monday. Britain's blue-chip
FTSE 100 index .FTSE edged up 0.6 percent.
Two opinion polls published on Monday put the "Remain" camp,
those campaigning for the United Kingdom to stay in the EU ahead
before Thursday's vote, but another gave "Leave" a slight lead.
Brent crude oil LCOc1 fell back below $50 a barrel, which
it past on Monday for the first time in a week in a rally driven
by polls that appeared to show the "Leave" campaigns momentum
weakening. It last traded at $49.95.
Concern that Britain, the world's fifth-largest economy,
will leave the EU has weighed on financial markets for weeks and
has been cited by central bankers, including Yellen, as a major
obstacle for the global economy.
Euro zone growth is gaining momentum but uncertainty is
high and the inflation outlook is subdued so the European
Central Bank stands ready to act if necessary, ECB President
Mario Draghi said in comments on Tuesday.
Sterling, the main vehicle used by international investors
to express a view on the referendum, rose as high as $1.4788
GBP , its strongest since early January, but gave up most of
those gains to trade down 0.1 percent at $1.4681.
"I think we'll hop from poll to poll ... and you'd have
thought that there will be another couple of wobbles before
we're done," said Societe Generale (PA:SOGN) macro strategist Kit Juckes.
The pound gained 0.8 percent to 153.78 yen GBPJPY= . The
Japanese currency, which is often sought by investors in times
of market uncertainty, also fell 0.6 percent to 104.58 per
dollar JPY= .
Yields on low risk U.S. Treasury yields fell slightly.
Benchmark 10-year notes US10YT=RR were last yielding 1.68
percent, down from 1.69 percent earlier on Tuesday. The bonds
closed on Monday with yields of 1.67 percent.
Gold, another "safe haven" where investors park their money
at times of heightened risk, fell 1.5 percent XAU= to
$1,270.91 an ounce on the reduction in Brexit risk.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters' new Live Markets blog on European and UK stock markets
reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
Interactive Brexit graphic http://tmsnrt.rs/1Ke31HF
Asset performance in 2016 http://reut.rs/1WAiOSC
Currencies in 2016 http://link.reuters.com/tak27s
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>