World stock markets up near record high; low yields help
NEW YORK (Reuters) - Global equity markets traded higher on Monday, although they pared gains from levels close to an all-time high, as low interest rates bolstered sentiment even as U.S. Treasury yields rose.
Wall Street's benchmark S&P 500, which had been poised to post its seventh record close in eight trading sessions, retreated and traded flat. The Dow and Nasdaq were higher in late trade.
Asian stocks touched their highest levels in nearly three years. Europe also advanced as Spain, Italy andPortugal spurred regional indices on bets those markets would benefit most from last week's European Central Bank stimulus measures.
Peripheral European bond yields set record lows, with S&P's upgrade of Ireland's credit pushing it to a record low of 2.39 percent. Spanish 10-year yields fell below those of U.S. Treasuries for the first time since April 2010, and Italian five-year yields were also below U.S. equivalents.
The low European yields highlighted the policy divergence between the ECB and the Federal Reserve, which is reining in its monetary stimulus. But with U.S. yields low, some investors prefer equities over bonds.
"The support is coming from extremely low bond yields and action in Europe, so it gives investors no real alternative, no real reason to sell stocks," said Rick Meckler, president of LibertyView Capital Management inJersey City, New Jersey, who also cited merger and acquisition deals.
MSCI's all-country world share index, which gauges stock performance in 45 countries, was up 0.08 percent at 426.87, just shy of its November 2007 peak of 428.63.
The pan-European FTSEurofirst 300 index advanced 0.38 percent to close at 1,393.71, near a January 2008 high.
The Dow Jones industrial average rose 12.89 points, or 0.08 percent, at 16,937.17. The Standard & Poor's 500 Index was up 0.29 points, or 0.01 percent, at 1,949.73. The Nasdaq Composite Index was up 8.54 points, or 0.20 percent, at 4,329.94.
U.S. Treasuries prices fell, pressured by this week's $62 billion sale of new coupon-bearing debt and increased risk appetite after Friday's strong U.S. jobs report.
Benchmark 10-year notes were last down 5/32 in price to yield 2.6131 percent.
Among major currencies, the dollar continued to benefit from rising U.S. Treasury yields. The dollar index was up 0.29 percent.
The euro drifted as low as $1.3583 as the dust settled after last week's ECB activity. The euro last traded down 0.40 percent at 1.3587 against the dollar.
Brent crude rose as strong Chinese and U.S. data pointed to healthy economic growth and higher demand from the world's top two consumers.
Brent rose $1.38 to settle at $109.99 a barrel. U.S. oil rose $1.75 to settle at $104.41.