(Adds GLOBAL MARKETS to headline)
* Oil soars as producers agree output cut
* Energy stocks jump
* Bonds sell off
* Dollar falls
* China shares' loss biggest in six months
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Caroline Valetkevitch
NEW YORK, Dec 12 Oil prices surged to their
highest level since mid-2015 on Monday after the world's top
crude producers agreed to the first joint output cut since 2001,
sparking concerns about inflation which pushed up U.S. Treasury
yields to a more than two-year peak.
Yields also gained ahead of a two-day policy meeting of the
Federal Reserve that starts on Tuesday, which is expected to
raise interest rates for the only the second time since the
global financial crisis.
Following the weekend agreement between OPEC and key
non-OPEC states that set the markets alive, Brent crude futures
were up $1.97 at $56.30 per barrel, having hit a session
peak of $57.89, the highest since July 2015. U.S. crude futures
were up $1.97 at $53.47 a barrel.
"The original OPEC deal pointed to a fairly lumpy 3 percent
cut (in production), so this suggests there is a bit more upside
for oil prices," said Neil Williams, chief economist at fund
There was particular surprise as Saudi Arabia, the world's
number one producer, said it may cut its output even more than
it had first suggested at an Organization of Petroleum Exporting
Countries meeting just over a week ago.
Energy shares jumped, helping to lift the Dow Jones
industrial average and S&P 500 to record intraday
highs in early trading, extending their recent string of
"This market has gone up without taking a breather and will
enter a cautious trading day as it awaits the Fed," said Peter
Cardillo, chief market economist at First Standard Financial in
Benchmark U.S. bond yields topped 2.5 percent
for the first time since October 2014, with analysts saying the
OPEC agreement boosted reflation expectations.
"We have the Fed decision coming up on Wednesday, and people
are unsure whether they should buy the dip here," said interest
rate strategist Gennadiy Goldberg of TD Securities in New York.
In late morning trading, U.S. 10-year note prices
were down 8/32, while the yield rose to 2.493
percent from 2.464 percent late on Friday. Earlier Monday, the
yield struck 2.528 percent, its highest since Sept. 29, 2014,
according to Reuters data.
In the currency markets, the dollar fell against most major
currencies on concerns the Fed could suggest in an upcoming
policy statement that the greenback's gains had gone too far.
Also, a rally in oil prices boosted commodity-linked
The dollar index, which measures the greenback
against a basket of six major currencies, was last down 0.45
percent at 101.130, easing from an earlier 1-1/2-week high of
The dollar was last down 0.4 percent against the Canadian
dollar at C$1.3122 after hitting C$1.3108, its lowest
level against the Canadian dollar since Oct. 20.
Overnight, Chinese stocks suffered their biggest fall in six
months as blue chips were knocked by fresh regulatory curbs to
rein in insurers' aggressive stock investments and rising bond
yields prompted profit-taking in equities.
The blue-chip CSI300 index fell 2.4 percent, to
3,409.18 points, while the Shanghai Composite Index lost
2.5 percent to 3,152.97 points.
China's insurance regulator, which recently warned it would
curb "barbaric" acquisitions by insurers, said late on Friday it
had suspended the insurance arm of China's Evergrande Group
from conducting stock market investment.
Concerns were also rumbling about U.S.-Sino relations after
Donald Trump re-ignited controversy over Taiwan.
(Additional reporting by Gertrude Chavez-Dreyfuss and Richard
Leong; Marc Jones and Tanya Agrawal; Editing by Chizu Nomiyama)