By Mike Bird

The global stock rally that followed Donald Trump's election stalled on Friday, while bond yields held at higher levels.

The S&P 500 slipped 0.3% and the Dow Jones Industrial Average fell 0.1% in morning trade. The Nasdaq Composite declined 0.5%.

Stocks have risen this week, with the Dow industrials reaching a fresh record Thursday.

In Europe, banking stocks pulled back after surging in recent days. The Stoxx Europe 600 index fell 0.3%.

Many analysts have attributed this week's gains in stocks and selloff in bonds to a warm reception from investors to Mr. Trump's plans for tax cuts and infrastructure spending, potentially funded by higher deficits.

"The market has to take into account how positive the policies from Trump may be. Inflation and growth expectations may firm up much higher than they have been," said Peter Chatwell, head of European rates strategy at Japanese bank Mizuho International.

U.S. bond markets were closed for Veterans Day, but U.K. 10-year gilt yields reached 1.4% in early trading -- their highest since before the Brexit vote in June -- before dipping to 1.357%. Germany's 10-year bund yields climbed to 0.3%, their highest since March. Bond yields rise as prices fall.

"These are the sort of levels I was expecting gilts and bunds to reach by the end of 2017. That's the reflation trade," Mr. Chatwell said.

Stocks in Asia were mixed Friday. Japan's Nikkei Stock Average closed 0.2% higher, but emerging-market equities in Asia sold off.

The Philippine PSEi closed down 2.9%, Indonesia's Jakarta Composite Index dropped 4.0% and South Korea's KOSPI index ended the day down 0.9%.

Copper prices continued to surge, rising more than 5%. The metal is on its longest winning streak for at least 28 years, and the price reached its highest level in a year.

Before the U.S. election, many analysts figured that the Federal Reserve might be less likely to raise interest rates in December in the event of a victory for Mr. Trump. As markets have rallied and priced in higher inflation, that view has shifted.

"A lot of people, myself included, would have taken the view that if equity markets sold off, it would've made a December Fed hike less likely," said Mike Bell, global market strategist at J.P. Morgan Asset Management. "The fact that markets have moved as they have clearly removes that argument."

In currency markets, the British pound rose 0.7% against the dollar to $1.2692 -- its highest level since the flash crash in October, when it plunged more than 6% in a matter of minutes.

Write to Mike Bird at Mike.Bird@wsj.com

(END) Dow Jones Newswires

November 11, 2016 09:52 ET (14:52 GMT)

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