Oil rallies on OPEC deal; bonds end dismal November

By Richard Leong

NEW YORK (Reuters) - Oil prices jumped around 9 percent on Wednesday as OPEC members sealed a deal to cut production, while upbeat U.S. economic data and comments from the U.S. Treasury Secretary nominee triggered a bond market sell-off, marking a miserable November for Treasuries.

Higher crude prices bolstered shares of energy producers and stock prices around the world, with the Dow and S&P 500 stock indexes touching record highs.

An improving view on global growth, led by the United States on hopes of tax cuts and federal spending under a Trump administration, rekindled the dollar's advance toward a near 14-year peak.

"Everything seems to be coming together for more growth and risk appetite," said Larry Milstein, head of agency and government trading at R.W. Pressprich & Co. in New York.

Gold lost its safe-haven luster as investor confidence strengthened, posting its worst monthly loss since mid-2013.

The Organization of the Petroleum Exporting Countries has agreed its first output limiting deal in eight years in an effort to deal with a global supply overhang, an OPEC source told Reuters as the debates continued in Vienna on the size of each member's cuts.

Brent crude <LCOc1> settled up $4.09, or 8.82 percent, at $50.47 a barrel. U.S. crude <CLc1> settled up $4.21 or 9.31 percent at $49.44.

The rally in energy shares helped lift the Dow and the S&P 500 to record intraday highs before retreating in late trading. The blue-chip U.S. stock indexes were also briefly boosted by bank stocks on bets of loosening of regulation under Trump and a Republican-controlled Congress.

The Dow Jones industrial average <.DJI> ended up 1.98 points, or 0.01 percent, to 19,123.58, the S&P 500 <.SPX> closed down 5.85 points, or 0.27 percent, to 2,198.81 and the Nasdaq Composite <.IXIC> finished down 56.24 points, or 1.05 percent, to 5,323.68.

For November, the Dow gained 5.4 percent, the S&P rose 3.4 percent and the Nasdaq increased 2.6 percent.

European stocks also advanced on a jump in oil companies <.SXEP>. But regional banks struggled after news Royal Bank of Scotland <RBS.L> failed a Bank of England stress test and Italian lenders fell before a referendum on the country's political system on Sunday. [.EU]

Europe's broad FTSEurofirst 300 index <.FTEU3> rose 0.53 percent at 1,350.85, raising its November gain to 0.9 percent.

The MSCI world equity index <.MIWD00000PUS>, which tracks shares in 45 nations, fell 0.50 point or 0.12 percent, to 413.43, reducing its monthly gain to 0.6 percent.

The jump in oil prices, together with stronger-than-expected data on U.S. private job growth and regional manufacturing on Wednesday, ignited a wave of selling in bonds, pushing benchmark U.S. yields toward their highest since July 2015.

An aversion to owning long-dated U.S. government bonds grew after U.S. Treasury nominee Steven Mnuchin told CNBC television: "We'll look at potentially extending maturity of the debt because eventually we're going to have higher interest rates."

U.S. 10-year Treasury note yield <US10YT=RR> rose 9 basis points to 2.39 percent, a tad below last week's 2.42 percent that was the highest since July 2015.

The German 10-year Bund yield was 4 basis points higher at 0.26 percent, while the Japanese 10-year yield edged up 1 basis point at 0.03 percent. <DE10YT=RR> <JP10YT=RR>

Bonds across the world lost about $2 trillion in market value since the Nov. 8 U.S. election before they recovered a bit this week, according to Bank of America Merrill Lynch <.MERGBMI> data.

Rising U.S. yields and upbeat domestic data pushed the dollar index <.DXY> up 0.59 percent at 101.53, which was short of the near 14-year high of 102.05 set last week. It was up about 3 percent for a second month in November.

Meanwhile, gold lost 8.2 percent in November for its biggest monthly decline since June 2013, largely pressured by the bets of a series of U.S. interest rate hikes over the next year as U.S. growth seemed to accelerating.

Spot gold prices <XAU=> fell $16.06 or 1.35 percent, to $1,172.28 an ounce.

(Additional reporting by Caroline Valetkevitch in New York and Marc Jones and Jemima Kelly in London; Editing by Nick Zieminski and James Dalgleish)