Stocks slip, bond yields rise on inflation worries

LONDON, June 1 (Reuters) – Global stocks fell and bond yields rose on Wednesday, while the dollar strengthened, as investors fretted over soaring inflation and the impact on global growth from looming interest rate rises.

Europe’s STOXX 600 index (.STOXX) turned negative in morning trading, giving up early gains of 0.3%. British stocks (.FTSE) fell 0.2%.

To blame were drops in commodity-linked and tech stocks that outweighed gains in banks and consumer shares, with data showing German retail sales fell by more than expected in April as consumers felt the pinch of higher prices. read more

Soaring food and energy costs drove euro zone inflation to a record-high 8.1% in May, figures on Tuesday showed, stoking concern about rate rises not just in Europe but globally. read more

The Bank of Canada is the latest central bank set to hike interest rates, with economists expecting an increase to 1.5% from 1.0% later on Wednesday. read more

Market players were watching whether attempts to douse inflation by central banks across the world with tighter monetary policy would spark recessions – something that could in turn see rate hikes slow.

“It’s just an incredibly uncertain environment at the moment,” said Mike Bell, a global market strategist at J.P. Morgan Asset Management. “In times like that, it makes sense just to moderate the size of one’s risk positions.”

Investors were also concerned, Bell said, about whether a European Union agreement on an embargo on Russian crude oil imports would see retaliation from Moscow. The ban aims to halt 90% of Russia’s crude imports into the bloc by year-end. read more

Wall Street was set to eke out slim gains. S&P 500 futures were last up 0.1%, losing some of their gains made in early London trade.

The MSCI world equity index (.MIWD00000PUS), which tracks shares in 50 countries, was flat.

Earlier, Shanghai emerged blinking from two months of lockdown but as data showed steep falls in factory activity across Asia from the withering of China’s demand, relief in the region was short-lived. read more

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.4%, dragged down by Hong Kong’s Hang Seng index (.HSI).

Euro zone bond yields, meanwhile, extended their rise in the wake of the bloc’s inflation data. Germany’s benchmark 10-year yield is already up 19 basis points (bps) this week, set for its biggest weekly rise in nearly a month.

As worries over global inflation flared anew, the U.S. dollar rose to a two-week high versus the yen, buoyed by higher Treasury yields. The dollar has arrested a three-week slide and hit a two-week high of 129.54 yen .

The dollar index , which measures the currency against six major peers, including the yen, rose 0.2% to…