In This Article:
* Long-dated Treasury yields scale back from multi-year highs
* Wall St stocks mixed, uncertainty prevails in Asia
* Italian bond yields fall as govt moots "collaboration" with EU
* Sterling strengthens on hopes for Brexit deal (updates throughout, changes byline, dateline)
By Sujata Rao
LONDON, Oct 10 (Reuters) - World stocks inched off eight-week lows on Wednesday as U.S. long-dated borrowing costs held below multi-year peaks, though market gains were checked by fears for global economic growth and the possibility of an Italy-EU clash over budget spending.
The effects of the global bond selloff that took U.S. 10-year bond yields to seven-year highs this week were exacerbated by economic growth concerns stemming from trade conflicts and $80-per-barrel oil, with the International Monetary Fund cutting its world GDP forecasts for the first time in two years.
The IMF's estimates for the United States and China were both reduced, with the fund predicting the countries would feel the brunt of their trade war next year. It also slashed its expectations for emerging markets for 2019.
MSCI's world equity index rose 0.14 percent after four days in the red. However, while Japan's Nikkei and MSCI's Asia-Pacific index outside Japan rose 0.2-0.3 percent, European shares slipped 0.2 percent, undermined by more bellicose rhetoric from Italian politicians.
Milan-listed stocks traded 0.15 percent higher however, rising off 18-month lows hit earlier in the week.
Wall Street was set to open flat to weaker, futures showed.
There are also concerns over China where the yuan slipped against the dollar for the fifth session out of the past six to approach four-year lows hit in August .
The focus is on next week's semi-annual U.S. report on currencies amid Treasury officials' comments that recent yuan depreciation has raised concerns in Washington.
However, some relief came from U.S. Treasuries where 10-year borrowing costs kept well below a 7-1/2-year peak of 3.261 percent.
"We are at some sort of critical moment, a crossroads, for bond and equity markets," Marie Owens Thomsen, global head of economic research at Indosuez Wealth Management, said noting that while U.S. 10-year yields at 2 percent unequivocally favoured equity investment, this was not so above 3 percent.
"This January we took out the 2 percent (yield) handle and now we are wondering if we are permanently taking out the 3 percent handle as well. That makes the climate for equities much more challenging," Owens Thomsen added.
She cautioned though that signs of deceleration in world growth and IMF forecast cuts could curb the relentless rise in yields which was partly fuelled by buoyant U.S. economic data.