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Global share rally peters out, euro lifted by PMI boost

Herbert Lash

Reuters

11:40 AM EDT, April 23, 2014

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NEW YORK (Reuters) - Global equity markets edged lower on Wednesday after five days of gains after disappointing U.S. housing data and as corporate earnings were not strong enough to sustain a rally, while the price of government debt rose as investors favored safety.

In Europe, rising worries over Ukraine also weighed, offsetting data that showed Germany continued to power the euro zone's recovery, though France's economy was still lagging in April.

Europe's private sector started the second quarter on its strongest footing in nearly three years, according to purchasing managers' index for the euro zone, although new orders were again mainly buoyed by price cuts.

But the pace of U.S. growth slowed in April, even as factory activity continued to expand, and sales of new U.S. single-family homes tumbled to their lowest level in eight months in March, dealing a setback to the housing market recovery.

Strong results from Boeing failed to inspire Wall Street investors to keep pushing equities higher. The S&P 500 on Tuesday had marked a sixth straight session of gains.

"As (U.S.) equities underperform, this leads to buying of Treasuries and yields fall. The dollar is softer as a result because it is reflecting other markets rather than internal components," said Sebastian Galy, senior currency strategist at Societe Generale in New York.

The benchmark 10-year U.S. Treasury note was last up 10/32 in price to yield 2.6896 percent.

MSCI's all-country world stock index, a measure of global stock portfolios, fell 0.13 percent. In Europe, the FTSEurofirst 300 index of leading regional shares, was down 0.45 percent at 1,340.52.

The Dow Jones industrial average fell 5.86 points or 0.04 percent, to 16,508.51. The S&P 500 lost 1.12 points,

or 0.06 percent, to 1,878.43, and the Nasdaq Composite dropped 17.061 points, or 0.41 percent, to 4,144.397.

Corporate earnings were mixed, though companies have largely been beating reduced forecasts.

Shares in Ericsson,the Swedish mobile telecom equipment maker, fell 7.1 percent, trimming the most points off of the FTSEurofirst 300, after the company's first-quarter sales and profit came in below analysts' forecasts. The results were hit by weak trading in North America.

Boeing Co reported first-quarter revenue that beat expectations and lifted its core earnings forecast to reflect a tax settlement gain, sending shares up 1.94 percent to $130.02.

But fellow Dow component AT&T Inc fell 3.1 percent to $35.17 a day after its results.

U.S. Treasuries prices rose after the weak economic data spurred safe-haven bids and traders covered short positions against bonds following a recent sell-off.

"You cannot continue to attribute this weakness in the economy to the weather and that's why people were a little surprised," said Stanley Sun, interest rate strategist at Nomura Securities International in New York.

The dollar slipped against the euro and yen. Its value against a basket of currencies fell to its lowest level in a week.

The euro rose 0.16 percent to $1.3825.

Against the yen, the dollar fell 0.22 percent to 102.37 yen.

Brent oil fell after weekly data showed U.S. crude inventories hit a record high, though prices found some support from the unfolding crisis in Ukraine. U.S. crude oil stocks jumped 3.5 million barrels to 397.6 million barrels last week, the U.S. Energy Information Administration said.

Brent crude for June delivery reversed slight gains after the EIA data to trade 29 cents lower at $109.04 a barrel.

U.S. crude for June delivery fell 9 cents to $101.666 a barrel.

(Reporting by Herbert Lash; Additional reporting by Marc Jones in London; Editing by Leslie Adler)