* Treasury yields, dollar fall on revised U.S. rate view
* Bund futures rise on ECB's Bini-Smaghi comments
* European stocks firm ahead of Goldman Sachs earnings
* Crude eases from record highs near $140
* Chinese shares down nearly 3 percent
By Carolyn Cohn
LONDON, June 17 (Reuters) - The dollar and U.S. Treasury
yields fell on Tuesday as investors reconsidered whether the
Federal Reserve will raise rates this year, while European
stocks rose on hopes for solid earnings from Goldman Sachs.
The Financial Times, Wall Street Journal and Washington Post
have run articles this week questioning the market's pricing of
aggressive U.S. interest rate increases to curb inflation.
U.S. rate futures have been pricing in two quarter point Fed
hikes by October, racing ahead of analysts' expectations for
U.S. interest rates to stay at 2 percent for the rest of the
year and well into next. []
"It appears that there's a coordinated effort from the Fed
to get the message across it's not engaging on a tightening
cycle at the moment," said Nicola Chadwick, international
economist at CBA.
However, the dollar trimmed some losses against the euro and
Bund futures rose in European trade after European Central Bank
Executive Board member Lorenzo Bini Smaghi said a quarter-point
euro zone rate hike should suffice to bring inflation below the
bank's 2 percent target.
The ECB has signalled it will probably raise rates next
month, but markets have also priced in further tightening later
this year from the current 4 percent.
The euro rose 0.3 percent against the dollar by 0815 GMT, to
$1.5507 <EUR=>. Sterling <GBP=> was briefly boosted against both
the euro and dollar by data showing British inflation rose to
3.3 percent in May, the highest since the series began in 1997.
The benchmark 10-year U.S Treasury note rose half a point in
price to yield 4.2151 percent <US10YT=RR>, a drop in yield of
more than 6 basis points from late New York, and Bund futures
rose 20 basis points to 110.30 <FGBLc1>.
The German June ZEW index of current conditions at 0900 GMT,
a key leading indicator for European markets, is forecast at
37.6 in June, down from 38.6.
U.S. first quarter current account and May producer prices
data are due at 1230 GMT.
STOCKS FIRM
European stock prices firmed as investors grew more
comfortable ahead of second-quarter earnings from U.S.
investment bank Goldman Sachs <GS.N>.
Lehman Brothers <LEH.N> share price rose as much as 9
percent on Monday after chief executive Dick Fuld expressed
confidence in the bank, even as it posted its first quarterly
loss as a public company.
"Goldman Sachs hasn't been one of those severely affected by
the financial crisis and I think they will reassure the market
with a positive surprise," said Stefan de Schutter, asset
manager at Alpha Trading.
The FTSEurofirst 300 <> index of top European shares
was up 0.81 percent at 1,273.10 points and Britain's FTSE 100
<> was up 0.78 percent.
The MSCI index of stocks in the Asia-Pacific region outside
of Japan also rose 0.91 percent <.MSCIAPJ>.
However, China's main stock index <> tumbled nearly 3
percent to a 15-month closing low because of concern about
domestic inflation and the market's ability to absorb fresh
supplies of equity.
Oil prices fed inflation worries, although they eased to
$135 a barrel from the all-time high of $139.89 <CLc1> hit on
Monday, with traders caught between a weaker dollar and
expectations that top exporter Saudi Arabia will ramp up output
to its highest rate in decades.
(Additional reporting by Kevin Plumberg in Hong Kong and
Simon Falush and Patrizia Kokot in London; Editing by Gerrard
Raven)
