An index of stocks across the world dipped on Friday but still posted its strongest weekly gain in five, while benchmark US Treasury yields climbed to 13-month highs, partly on optimism after a $1.9 trillion recovery package was signed into law.

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On Wall Street, the S&P 500 drifted higher to end up 0.1 percent on the day and 2.6 percent for the week, its strongest weekly showing since early February. The Nasdaq underperformed as the rotation from growth to value continued. The Dow Industrials hit an intraday record high every day this week.

The Friday spike in Treasury yields supported the dollar, which closed the week down 0.3 percent against a basket of currency peers, the biggest drop in four weeks.

With US stimulus coming and vaccine rollouts reopening economies against a backdrop of super-loose monetary policy, some analysts expect inflation to pick up.

"We are back to the idea that more growth is more inflation and investors are a little nervous about current yield levels which is affecting tech stocks," said Victoria Fernandez, chief market strategist at Crossmark Global Investments in Houston.

"It's all about the pace in which yields grow and the market seems to be comfortable with another 10-20 basis points jump in the benchmark yield if backed up by strong data that shows economic recovery."

The Dow Jones Industrial Average rose 293.05 points, or 0.9 percent, to 32,778.64, the S&P 500 gained 4 points, or 0.10 percent, to 3,943.34 and the Nasdaq Composite dropped 78.81 points, or 0.59 percent, to 13,319.87.

The Dow had its biggest week so far this year with a 4.1 percent advance and the Nasdaq posted its first positive week in four, up 3.1 percent.

The pan-European STOXX 600 index lost 0.26 percent on Friday and MSCI's gauge of stocks across the globe shed 0.06 percent.

Emerging market stocks lost 0.69 percent. Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.64 percent lower, while Japan's Nikkei rose 1.73 percent.

US 10-year Treasury yields rose above 1.6 percent and posted their seventh consecutive weekly rise.

"The bias in rates is still higher barring an unforeseen setback on the vaccines or explicit Fed action," said Gregory Faranello, head of US rates at AmeriVet Securities in New York.

US data showed producer prices posted in February their largest annual gain in nearly 2-1/2 years, but the currently high unemployment rate could make it harder for businesses to pass on the higher costs to consumers.

Benchmark 10-year notes last fell 28/32 in price to yield 1.6247 percent, from 1.527 percent late on Thursday.

The recent, sharp, market moves give even more importance to next week's meeting of the US Federal Reserve for clues to its views on rising yields and the threat of inflation.

In currency markets, the dollar index rose 0.243 percent, with the euro down 0.27 percent to $1.1952.

The Japanese yen weakened 0.49 percent versus the greenback at 109.04 per dollar, while Sterling was last trading at $1.3924, down 0.47 percent on the day.

Markets are likely to remain volatile in the second quarter, particularly for the dollar, which was much stronger than expected at the start of the year, said Cliff Zhao, chief strategist at China Construction Bank International.

"The strong US dollar may weigh on some liquidity conditions in the emerging markets," he said.

The Institute of International Finance on Thursday urged the Fed to give guidance on its managing of higher yields to avoid even more outflows from emerging markets.

Oil prices fell, with both Brent and WTI down slightly for the week after rising more than 10 percent over the past two.

On Friday, US crude fell 0.67 percent to $65.58 per barrel and Brent was at $69.20, down 0.62 percent on the day.

Spot gold added 0.1 percent to $1,723.75 an ounce. Silver fell 0.82 percent to $25.86.

Bitcoin last fell 1.92 percent to $56,661.44.

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