By Yoruk Bahceli
(Reuters) — European stocks edged higher on Monday after a rout last week while longer-dated U.S. Treasury yields rose to a fresh 12-year high as oil prices firmed even as China eased policy less than investors expected.
China's central bank trimmed its one-year lending rate by 10 basis points and left its five-year rate unmoved. That was a surprise to analysts who had expected cuts of 15 basis points to both as recovery in the world's second largest economy has lost steam due to a worsening property slump, weak spending and tumbling credit growth.
«The small injection of stimulus by China's central bank in the ailing economy has proved largely underwhelming given the scale of the challenges erupting across sectors, but it has given investors hope there could be more to come,» said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Analysts said concern around downward pressure on the yuan, which has lost nearly 6% against the dollar this year, is likely limiting the size and scope of rate cuts.
While disappointment sent Asian shares lower, European shares rose on Monday and U.S. stock futures also pointed to a recovery there.
Europe's STOXX 600 index was up 0.7% by 1207 GMT, following last week's 2.3% drop, with energy companies outperforming as oil prices rose with tightening supply from Saudi Arabia offsetting demand concerns.
Oil prices rose as much as $1 after snapping a seven-week winning streak last week on concerns about Chinese demand. Brent crude was last at $85.74 a barrel, while U.S. crude was at $82.37.
In bond markets, a selloff that sent government borrowing costs to their highest in over a decade regained impetus on Monday.
Longer-dated U.S. Treasury yields were up
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