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| - A rise in US government bond yields brought the Wall Street stocks rally triggered by an upbeat outlook from the US Federal Reserve to an end on Thursday, while oil prices tumbled on fears of rising supply amid still-weak demand. Still, equities in Asia and Europe pushed higher after the Fed on Wednesday ramped up its outlook for the US economy and reiterated its pledge to maintain its ultra-loose market-friendly monetary policies for as long as needed. Wall Street had rallied on the news Wednesday, with the Dow ending above 33,000 points for the first time, while the S&P 500 also chalked up a record. But renewed inflation fears that pushed yields on the 10-year Treasury bond above 1.7 percent sunk indices on Thursday, with the Nasdaq losing 3.0 percent and the S&P 500 and Dow closing off their records. "Yesterday, the market appreciated that the Fed was acknowledging stronger growth but maintained its dovish accommodative position. Today, obviously, there is a rethink in the market," Quincy Krosby of Prudential said. The sell-off came despite the Fed's pledge that the record low interest rates, which have been a key pillar of the year-long markets rally, will not be touched for the foreseeable future, even if inflation surges. Traders were apparently more convinced by the central bank's forecast that the world's top economy would expand 6.5 percent this year, a full two percentage points above their earlier projection, thanks to trillions of dollars in government spending, which has raised concerns of rising prices. Data released before US markets opened showed the Philadelphia Federal Reserve Bank's manufacturing index more than doubled from February, pushing prices up -- exactly the kind of inflation signal Wall Street fears. The worry is that the Fed may have to raise interest rates sooner than it has indicated it plans to do, which would upend some of economic assumptions that have underpinned the recent stocks rally. Market analyst Patrick O'Hare at Briefing.com noted that after initially falling following the Fed meeting, US Treasury yields rose overnight. "What the Treasury market heard and what it has been thinking overnight, though, have turned out to be two different things. The thinking overnight is that, 'the Fed risks playing with inflation fire and we don't like it.'" "The implication is that the stock market doesn't like so much what the Treasury market is thinking, because the jump in long-term rates is a threat to the high-multiple growth stocks," added O'Hare. Oil plunged in New York trading, after the US Energy Information Administration released data showing crude stocks had reached their highest point since early December. That added to anxiety over the troubled rollout of the AstraZeneca Covid-19 vaccine in Europe, as markets feared European economies could be set for months more of business restrictions. "Crude prices are declining for a fifth consecutive day as concerns grow that Europe won't have a regular summer" which means an expected rebound in demand will be softer than forecast, said analyst Edward Moya at Oanda. A number of European countries are tightening restrictions as more contagious variants of the coronavirus have seen infections and hospitalizations surge, while vaccination campaigns have struggled due to limited supplies and worries about the AstraZeneca jab. European equities nonetheless ended the day on a positive note. Frankfurt jumped 1.2 percent to hit a fresh record, with sentiment boosted partly by the flotation of Vantage Towers, the German phone masts unit of British telecoms giant Vodafone. Paris edged 0.1 percent higher, and London rose 0.3 percent after the Bank of England also signalled it planned to keep interest rates at record lows for the foreseeable future. New York - Nasdaq: DOWN 3.0 percent at 13,116.17 (close) New York - Dow: DOWN 0.5 percent at 32,862.17 (close) New York - S&P 500: DOWN 1.5 percent at 3,915.47 (close) EURO STOXX 50: UP 0.5 percent at 3,867.54 (close) London - FTSE 100: UP 0.3 percent at 6,779.68 (close) Frankfurt - DAX 30: UP 1.2 percent at 14,775.52 (close) Paris - CAC 40: UP 0.1 percent at 6,062.79 (close) Tokyo - Nikkei 225: UP 1.0 percent at 30,216.75 (close) Hong Kong - Hang Seng: UP 1.3 percent at 29,405.72 (close) Shanghai - Composite: UP 0.5 percent at 3,463.07 (close) Euro/dollar: DOWN at $1.1916 from $1.1979 at 2200 GMT Pound/dollar: DOWN at $1.3928 from $1.3966 Euro/pound: DOWN at 85.52 pence from 85.78 pence Dollar/yen: UP at 108.90 yen from 108.84 yen Brent North Sea crude: DOWN 6.9 percent at $63.28 per-barrel West Texas Intermediate: DOWN 7.1 percent at $60.00 per-barrel burs-cs/mdl
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