* U.S. 10-year yields at 1.68%, near 14-month high
* Oil prices flat after huge Thursday fall
* Nasdaq futures up 0.65% after sharp Thursday drop
By Carolyn Cohn
LONDON, March 19 (Reuters) - U.S. bond yields on Friday eased from the 14-month highs reached the day before as markets looked to a U.S. economic recovery, while oil prices steadied after a slide.
Bond markets have experienced sharp moves this week with the U.S. Federal Reserve saying it expects higher economic growth and inflation in the United States this year, although it repeated its pledge to keep its target interest rate near zero. man and his dog is looking at bond yields," said Giles Coghlan, chief currency analyst at HYCM. "Even though (Fed chair Jerome) Powell was dovish, bond yields marched higher, purely on anticipation that the Fed is behind the curve - the market is pricing rate hikes in."
Yields on U.S. 10-year notes, which move inversely to prices and have been rising for the past seven weeks on growth expectations, spiked to their highest since January 2020 at 1.754% US10YT=RR on Thursday. They eased to 1.6838% on Friday.
German long-dated government bond yields dipped in tandem with U.S. yields. DE30YT=RR
But SEB analysts said they expected the U.S. 10-year Treasury yield to hit 2% this year, "potentially already by the summer...propelled by the strong U.S. recovery outlook aided by new stimulus checks and a fast increase in the U.S. CPI (consumer price inflation)".
Nasdaq futures NQc1 rose 0.65% and S&P 500 futures ESc1 gained 0.2%.
Oil prices and the Nasdaq fell 7% and 3% respectively on Thursday on worries over faltering vaccine roll-outs and further slowdowns in Europe. France imposed a one-month lockdown in Paris and parts of the north. stocks .FCHI fell 0.65% on Friday, while UK stocks .FTSE were 1% lower as energy stocks dropped.
MSCI world stocks .MIWD00000PUS fell 0.27% from one-month highs in the previous session
Brent crude futures LCOc1 ticked up four cents to $63.33 a barrel. U.S. crude CLc1 rose 19 cents to $60.19. O/R
Oil's retreat on Thursday wiped out four weeks of gains in a single session amid worries world demand would fall short of high expectations.
The euro EUR= weakened 0.14% to $1.1897. The dollar edged up 0.1% to 91.909 against a basket of currencies and was steady against the yen at 108.82 JPY= .
Markets were unsettled by the Bank of Japan's (BOJ) decision to slightly widen the target band for 10-year yields and tweak its buying of assets.
The bank portrayed the changes as a "nimble" way to make easing more sustainable, though investors seemed to take it as a step back from all-out stimulus. A decision to confine purchases to only TOPIX-linked ETFs knocked the Nikkei .N225 down 1.4%.
Chinese blue chips .CSI300 shed 2.6%, as the first high-level U.S.-China meeting of the Biden administration got off to a fiery start. rise in bond yields has weighed on gold, which offers no fixed return, leaving it down 0.2% at $1,740 an ounce XAU= .
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