* Oil falls; dollar climbs to 8-week high versus yen
* World stocks fall, U.S. indexes lower on light volume
* U.S. retail sales softer than expected, hit by weather
* China inflation ex-food at decade high
(Recasts, updates prices, adds details, comments)
By Wanfeng Zhou
NEW YORK, Feb 15 (Reuters) - World stocks edged off recent
30-month highs on Tuesday and oil prices retreated as
disappointing retail sales in the United States and persistent
inflationary pressures in China dented optimism about the
global economic outlook.
The U.S. dollar climbed to an eight-week high against the
yen, lifted by a jump in two-year Treasury yields <US2YT=RR> to
their highest since last May. Rising bond yields have pushed
the dollar up about 3 percent versus the yen over the last two
weeks.
Sales at U.S. retailers rose by a less-than-forecast 0.3
percent in January, partly due to harsh winter weather, though
economists said the underlying trend of improved spending
remained intact. []
"The softer data will see the growth bulls marginally lower
forecasts for first-quarter retail activity, but the market
impact will be softened as economists give room for a rebound
after weather improves," said Avery Shenfeld, CIBC chief
economist in Toronto.
The MSCI All-Country World index <.MIWD00000PUS> dipped 0.1
percent, holding near last week's 30-month highs.
The Dow Jones industrial average <> was down 41.55
points, or 0.34 percent, at 12,226.64. The Standard & Poor's
500 Index <.SPX> was down 4.31 points, or 0.32 percent, at
1,328.01. The Nasdaq Composite Index <> was down 12.83
points, or 0.46 percent, at 2,804.35. Volume remained light,
following the slowest trading day in U.S. markets this year.
Brent crude for April delivery <LCOc1> fell $1.44 to settle
at $101.64 a barrel, after hitting a 28-month peak at $104.30
on Monday. U.S. crude <CLc1> for March delivery fell 49 cents
to settle at $84.32 a barrel, ahead of weekly oil inventory
data expected to show U.S. crude oil stocks rose last week.
While protests in Iran and other Middle East countries
remained a concern, analysts also looked for some unwinding of
the geopolitical fear premium that emerged during Egypt's
protests.
"There may be some unwinding of the fear premium on overall
risk reduction as the Middle East hasn't gotten out of control
yet and traders also are getting ready for another expected
rise in U.S. oil supplies," said Phil Flynn, analyst at PFGBest
Research in Chicago.
Data overnight showed Chinese inflation came in lower than
expected at 4.9 percent in the year to January, but price
pressures excluding food were their strongest in at least a
decade and could force the central bank to keep tightening
monetary policy. []
In Britain, inflation jumped to twice the Bank of England's
target in January, prompting BoE Governor Mervyn King to
acknowledge that interest rates might rise more rapidly than
economists had expected.
Rising inflation worries pushed gold to a four-week high,
while the prospects of more tightening in China pushed copper
off record highs in its biggest one-day slide in three weeks.
DOLLAR AND YIELDS
The dollar climbed to 83.93 yen <JPY=EBS> on trading
platform EBS, the highest level since mid-December, lifted by
the recent rise in bond yields. It was last up 0.6 percent at
83.76 yen.
"If the upswing in Treasury yields continues, it is not
unreasonable that we see further upside for the dollar against
the yen," said David Watt, senior currency strategist at RBC
Capital Markets in Toronto. "If risk appetites improve, that
will also present further downside for the yen."
The dollar was little changed versus the euro <EUR=EBS>
after Europe moved closer to a deal on tackling its debt crisis
and officials said there would be additional meetings to try to
reach an accord. []
Uncertainty over a rescue package has caused spreads
between peripheral nation bond yields and German benchmarks to
widen in recent days. Greece bonds were a notable
underperformer on Tuesday after data showed its recession
deepened in the last months of 2010.
The euro zone ended last year with stable economic growth,
but disappointed those hoping for a faster recovery as
expansion in the three largest nations fell short of forecasts,
and Greece and Portugal contracted. But German data and a
sentiment indicator suggested the country's economic recovery
remained on track.
(Additional reporting by Robert Gibbons, Julie Haviv Edward
Krudy in New York and Jeremy Gaunt and Claire Milhench in
London; editing by Dan Grebler)
