Volkswacht Bodensee - Stocks waver as US rate fears hold sway; oil drops

Analysts say signs of a robust American economy, such as strong labour market data earlier this week, are in fact bad news for equities as it gives the Federal Reserve more reason to keep monetary policy tight through the end of the year and beyond.

The prospect has weighed heavily on US Treasury yields, which hit their highest levels since 2007 this week as investors fear that high borrowing costs will eventually dent economic growth.

The latest weekly jobless claims in the United States released Thursday, at 207,000, also suggested a tight market that could feed wage inflation.

All eyes will now be on Friday's US employment figures for clues on the health of the world's biggest economy and the Fed's next moves.

"The markets sell-off which saw government bond prices fall and yields rise has taken centre stage this week, and investors continue to watch the 10-year Treasury yield like a hawk," said AJ Bell investment director Russ Mould.

"Having dipped slightly on Wednesday, the yield has since crept back up to 4.75 percent as investors readjust portfolios to align with the prospect of interest rates staying higher for longer," he said.

Oil prices tumbled further after a US report on gasoline inventories came in much higher than analysts expected, an indication of weakening demand in the world's largest economy.

"Gasoline inventory builds have spilled over into crude markets amid concerns about a potential 2024 recession driven by rising interest rates," said Stephen Innes, a partner at SPI Asset Management.

But Europe's main indices stayed mostly in positive territory on the back of Wall Street's rebound on Wednesday, as did Asian markets, with Tokyo jumping 1.8 percent by the close.

Markets in mainland China were shut for a weeklong holiday.

- Key figures around 1345 GMT -

New York - Dow: UP 0.2 percent at 33,076.35 points

London - FTSE 100: UP 0.7 percent at 7,462.45

Frankfurt - DAX: FLAT at 15,099.94

Paris - CAC 40: UP 0.2 percent at 7,008.68

EURO STOXX 50: UP 0.3 percent at 4,109.99

Tokyo - Nikkei 225: UP 1.8 percent at 31,075.36 (close)

Hong Kong - Hang Seng Index: UP 0.1 percent at 17,213.87 (close)

Shanghai - Composite: Closed for a holiday

Euro/dollar: UP at $1.0518 from $1.0504 on Wednesday

Dollar/yen: DOWN at 148.75 yen from 149.12 yen

Pound/dollar: UP at $1.2144 from $1.2135

Euro/pound: UP at 86.64 pence from 86.55 pence

Brent North Sea crude: DOWN 1.6 percent at $84.44 per barrel

West Texas Intermediate: DOWN 1.8 percent at $82.74 per barrel

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O.Schlaepfer--VB