NEW YORK - Treasury yields were extending their rise on Friday, while U.S. stocks hit new highs, mimicking gains in European equities, and the dollar weakened as markets relaxed a bit over fears of a slowing pace of economic recovery from COVID-19.

The first sizable selloff in bonds in eight sessions reflected prices getting a bit lofty after a slew of mostly upward moves, which pushed yields down to a 4-1/2 month low on Thursday.

"The downward pressure in yields from continual buying just frankly ran out of steam ... at these levels," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC in Philadelphia.

Investors also are looking ahead to appetite for Treasury auctions of $38 billion of 10-year notes on Monday, and $24 billion of 30-year bonds on Tuesday.

"If auction demand is a little bit squishy, especially at the 10-year sale, then we could see 1.45% in a hurry," he added, referring to the 10-year Treasury yield.

Markets were roiled earlier this week as a rise in cases of the delta coronavirus variant reduced risk appetite and prompted a flight to safety, with some betting the reflation trade had stalled and secular stagnation was back on the agenda.

Around 1800 GMT, the broad S&P 500 was up 41 points, or 0.95%, to 4,361.82. The Dow Jones Industrial Average was up 415.53 points, or 1.21%, to 34,837.46. The tech-heavy Nasdaq Composite added 123.20 points, or 0.85%, to 14,682.99.

Despite the market moves on Friday, concerns remained that vaccination alone won't squelch the virus enough to get economies back to normal. Pfizer and partner BioNTech said they plan to ask regulators to authorize a booster dose of their vaccine, based on evidence of greater risk of infection six months after inoculation and the spread of the highly contagious Delta variant.

That has stoked fears "that in the fall, we might be shutting down again," said Tom di Galoma, managing director at Seaport Global Holdings in New York.

The fear is partly offset by ultra-easy monetary policy from major central banks. But that could be tapered if inflation picks up.

After dipping sharply over the early part of the week, yields on 10-year Treasury notes were up on Friday by 7.2 basis points to 1.360%, well above the 4-1/2 month low of 1.25% hit on Thursday.

In Europe, safe-haven German Bund yields ticked higher but were still eyeing the biggest two-week drop since March 2020 as investors eyed a likely longer road to economic recovery.

In currencies, the safe haven yen weakened 0.35% versus the greenback at 110.18 per dollar.

The dollar index fell 0.205%, with the euro up 0.24% to $1.1871.

Gold, another safe-haven asset, was on track for its third straight weekly gain. It was up 0.4% to $1,810.50 an ounce.

Oil prices added to overnight gains as U.S inventories declined, but remain on course for a weekly loss. U.S. crude was up 2.1% to $74.47 per barrel and Brent was at $75.54, up 1.92%.

(Additional reporting by Simon Jessop Abhinav Ramnarayan, Swati Pandey and Sujata Rao; Editing by Timothy Heritage, William Maclean and Chizu Nomiyama) ((alwyn.scott@thomsonreuters.com; +13322191977; Reuters Messaging: alwyn.scott.thomsonreuters.com@reuters.net))

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