By Chuck Mikolajczak

NEW YORK (Reuters) – A gauge of global stocks eased on Monday after scoring its biggest weekly percentage gain in two years last week and U.S. bond yields rose as a Federal Reserve official dampened hopes the central bank may be close to pausing its tightening path.

Equities rallied last week and U.S. Treasury yields tumbled after consumer price data indicated stubbornly high inflation may finally be starting to slow.

But Federal Reserve Governor Christopher Waller said on Sunday that though the central bank may consider slowing the pace of rate increases at its next meeting, that should not be taken as a “softening” in the fight to bring down inflation, and while the data was “good news” it was “just one data point.”

“The market is expecting the Fed to continue its hawkish rhetoric on rates,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

“That could all change once we get more confirmation on inflation in December. Once they (the Fed) raise rates at 50 (bps), there’s a possibility that they might indicate slower rates.”

On Wall Street, the S&P 500 was modestly lower after recording its biggest weekly percentage gain since June last week, weighed down by declines in megacap growth companies such as Microsoft and Amazon that have struggled this year as the Fed embarked on its path of rate hikes.

The Dow Jones Industrial Average rose 25.23 points, or 0.07%, to 33,773.09, while the S&P 500 lost 5.22 points, or 0.13%, to 3,987.71 and the Nasdaq Composite dropped 78.59 points, or 0.69%, to 11,244.74.

The pan-European STOXX 600 index rose 0.27% and MSCI’s gauge of stocks across the globe shed 0.09%.

Investors will get another look at inflation when the U.S. producer price index is released on Tuesday.

Benchmark 10-year notes were up 6.4 basis points to 3.893% from 3.829% late on Thursday. The bond market was closed for the Veterans Day holiday on Friday.

The two-year yield was up 10.5 basis points at 4.431%, from 4.326%

In contrast, dovish comments from European Central Bank policymaker Fabio Panetta and Cypriot policymaker Constantinos Herodotou helped send European bond yields lower, although short-dated rates remained near multi-year highs hit recently.

Germany’s 2-year government bond yield was down 1.9 basis points at 2.111% from 2.13%, after climbing to 2.252% last week, its highest since 2008.

After its biggest weekly percentage drop since March 2020 last week, the dollar index rose 0.15%, with the euro down 0.21% to $1.033.

U.S.-listed Chinese stocks gained on reports regulators have asked financial institutions to extend more support to stressed property developers amid signs the government may be starting to relax some of its strict COVID-19 policies. E-commerce firm Alibaba.com shares were up 1.61%.

U.S. President Joe Biden met Chinese leader Xi Jinping in person on Monday for the first time since taking office on the sidelines of the Group of 20 (G20) summit, with both stressing the need for a better dialogue between their nations and the two sides establishing a mechanism for more frequent communications.

In cryptocurrencies, bitcoin was last down 1.41% at $16,518 after falling below $16,000 for the first time since Thursday as investors continue to assess the fallout from last week’s collapse of crypto exchange FTX.

(Reporting by Chuck Mikolajczak; Additional reporting by Ankika Biswas; Editing by Jan Harvey)