Thursday 10:30 BST. European and US equity gauges are struggling for traction as lingering uncertainty over the trajectory and effectiveness of monetary policy pushes down bond prices, forcing yields close to multi-week highs.

The dollar is a touch stronger, while industrial commodity prices are mainly firmer.

The pan-European Stoxx 600 index is up less than 0.2 per cent as US index futures suggest the S&P 500 will dip 0.1 per cent to 2,124.5, eyeing its lowest close since early July.

“The ongoing reversal in global sovereign bond markets is ensuring that equity investors remain nervous,” explained Ian Williams, strategist at Peel Hunt.

Ten-year US Treasury yields, which hit a record low of 1.32 per cent on July 6, are up 2 basis points to 1.70 per cent, just shy of their three-month high of 1.75 per cent touched on Tuesday.

Equivalent maturity German Bunds, which this summer touched a record trough of minus 0.20 per cent, are adding 2bp to 0.05 per cent, while UK gilts are up 5bp to 0.92 per cent ahead of the Bank of England’s monetary policy decision and after UK retail sales were better than expected.

Sterling is off 0.1 per cent at $1.3226 as the BoE is expected on Thursday not to alter interest rates or its stimulus package.

The Federal Reserve and Bank of Japan are due next week to hold policy meetings, and the looming “risk events” are contributing to the uncertain outlook for global monetary policy.

“There are concerns that the Fed will soon be hiking interest rates, and that other central banks — such as the ECB and BoJ — might be reaching the limits of asset purchase programmes,” said Nick Kounis, head of macro research at ABN Amro.

“While these concerns are to some extent justified, our sense is that policy will remain relatively accommodative. Although the Fed will probably increase rates in December, we think that further tightening will be exceedingly slow.”

In the wake of a soft batch of US economic data, contrasting commentary from Federal Reserve policymakers over the past week has seen markets flip-flop.

Overall, it has prompted traders to scale back bets that the central bank will lift rates next week. The chance of a 25 basis point increase on September 21 has fallen to 20 per cent compared with 22 per cent a week ago, according to pricing tracked by Bloomberg.

The dollar index, which measures the buck against a basket of its peers, is up 0.1 per cent to 95.43. Gold, which is sensitive to moves in the greenback and monetary policy expectations, is down $2 at $1,320.5 an ounce.

The steadier dollar is helping buck-denominated raw materials. The price of Brent crude is up 0.7 per cent to $46.021a barrel, recovering some ground after slumping 2.7 per cent on Wednesday, despite data from the Energy Information Administration showing that US crude inventories fell last week.

Base metals are firm, with copper holding near a four-week high, though volumes have been hit by the absence of some traders as China takes the rest of the week off for the mid-autumn festival. Taiwan and South Korea were also shut on Thursday, and Hong Kong, whose Hang Seng added 0.6 per cent, will start its long weekend on Friday.

The region’s thin attendance left Tokyo to bear the brunt of investor anxiety, with the exporter-sensitive Nikkei 225 slipping 1.3 per cent to three-week lows as the yen earlier strengthened back towards ¥102 per dollar.

Australia’s S&P/ASX 200 rose 0.2 per cent, while the currency is trading 0.1 per cent firmer at $0.7475 after data showed the Australian economy shed 3,900 jobs in August, compared with consensus expectations of a 15,000 gain. There were some encouraging signs that more full-time jobs — typically better-paid and higher-quality — were added, and the unemployment rate fell to a three-year low of 5.6 per cent.

But not all analysts were convinced. “While the key leading indicators of the labour market suggest the labour market will do reasonably well, we think today’s drop in the jobless rate is overstating the strength. As such, we view recent momentum as unlikely to be sufficient to lift core inflation any time soon,” said Tom Kennedy at JPMorgan.

Australian government bonds continued to track the global sell-off facing a sixth consecutive day of declines and the longest losing streak in 10 months, with yields on the benchmark 10-year note up 2 basis points to 2.11 per cent.

Additional reporting by Peter Wells in Hong Kong

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