* Shares dragged lower by financial, energy sectors
* Oil prices hover near seven-month lows
* U.S. Treasury yield curve narrowest in nearly a decade
* Dollar gains vs yen after positive U.S. existing home sales (Updates to open of U.S. markets; changes byline, dateline, pvs LONDON)
By Sam Forgione
NEW YORK, June 21 (Reuters) - Declines in financial and energy shares weighed on U.S. and European equity markets on Wednesday, while the U.S. Treasury yield curve hit the narrowest in nearly a decade as investors evaluated hawkish Federal Reserve policy and deteriorating inflation measures.
The U.S. S&P 500 financial sector .SPSY was last down about 0.4 percent while the European Stoxx Europe 600 Financial Services index .SXFP was down 1.3 percent. The financial sector fell as the U.S. Treasury yield curve held near 10-year lows. drop in oil prices to near seven-month lows also put pressure on energy shares as investors discounted evidence that major producers are sticking to a deal to cut output. The U.S. Nasdaq Composite bucked the trend, rising on gains in biotechnology stocks.
So far this year, oil has lost 20 percent in value, its weakest performance for the first six months of the year since 1997. Brent crude LCOc1 was last down 43 cents, or 0.93 percent, at $45.59 a barrel. U.S. crude CLc1 was down 33 cents, or 0.76 percent, at $43.18 per barrel. has perhaps tempered some sentiment near-term," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis. "If oil falls below $40, one would see pressure on overall earnings, not just the energy sector."
MSCI's all-country world equity index .MIWD00000PUS was last down 0.58 points or 0.12 percent, at 465.71.
The Dow Jones Industrial Average .DJI was last down 26.95 points, or 0.13 percent, at 21,440.19. The S&P 500 .SPX was down 0.18 points, or 0.01 percent, at 2,436.85. The Nasdaq Composite .IXIC added 33.13 points, or 0.54 percent, to 6,221.17. broad FTSEurofirst 300 index .FTEU3 dropped 0.23 percent to 1,527.1.
The yield curve between five-year notes and 30-year bonds US5US30=TWEB flattened to 96 basis points, the narrowest since December 2007. Five-year note yields US5YT=RR , which are highly sensitive to rate policy, rose to a four-week high of 1.80 percent on Tuesday.
Thirty-year bond yields US30YT=RR , which are largely driven by future expectations of growth and inflation, meanwhile dropped to 2.72 percent on Wednesday, the lowest since Nov. 9. think the market may be pricing in a little higher odds of another rate hike before the end of the year, and that is helping drive some of the flattening," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.
Hawkish comments from the Bank of England's chief economist Andy Haldane were also seen as hurting short-term bonds on Wednesday. dollar edged higher against the yen after data showed U.S. existing home sales posted a surprise increase in May, soothing some concerns about a real estate slowdown. steadied after sliding to a five-week low in the previous session. Spot gold prices XAU= were last up $1.68, or 0.14 percent, at $1,244.49 an ounce.
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http://reut.rs/2sSBRiD World FX rates in 2017
http://tmsnrt.rs/2egbfVh Global assets in 2017
http://reut.rs/1WAiOSC Global bonds dashboard
http://tmsnrt.rs/2fPTds0 Global market cap
http://reut.rs/2mcp7T1 Emerging markets in 2017
http://tmsnrt.rs/2ihRugV
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