GLOBAL MARKETS-U.S. stocks retreat from highs; dollar falls

Fri Mar 15, 2013 11:11am EDT

* Dow's 10-day winning streak may come to a halt

* Dollar index retreats from seven-month high

* Reduced risk appetite boosts bond, gold prices

* Improving view on U.S. lifts Brent oil above $110/bbl

By Richard Leong

NEW YORK, March 15 (Reuters) - Wall Street stocks fell on Friday from near record levels as a 10-day rally paused, while the dollar fell on views the Federal Reserve will pursue its aggressive monetary campaign despite signs the U.S. economy is strengthening.

With the pullback in U.S. stock prices, the Dow Jones industrial average was in danger of ending its recent winning streak, while European shares retreated from 4-1/2-year highs.

Investors shifted some money into safe-haven gold and U.S. and German government debt.

Evidence of an improving U.S. economy, together with supply concerns from the Middle East, boosted oil prices in London back above $110 a barrel.

As the U.S. jobs picture brightens despite tax increases and government spending cuts, some analysts remain upbeat about the longer-term prospects for stocks.

"If we do get a little bit of a retracement it's just a dip and all these dips are being met by investors looking to buy any kind of reversal they can get near," said Gordon Charlop, managing director at Rosenblatt Securities in New York.

In addition to signs of the labor market picking up steam, data on Friday showed continued growth in U.S. manufacturing, although optimism was muted by news of a stronger-than-expected 0.7 percent rise in consumer inflation in February and a surprise deterioration in consumer confidence.

The Dow Jones industrial average was down 40.67 points, or 0.28 percent, at 14,498.47. The Standard & Poor's 500 Index was down 3.37 points, or 0.22 percent, at 1,559.86. The Nasdaq Composite Index was down 10.39 points, or 0.32 percent, at 3,248.54.

The S&P 500 was within a few points of its record high on Thursday.

Europe's broad FTSEurofirst 300 index fell 0.5 percent to 1,201.81 but was still on course for its fifth weekly rise and hovering near its best levels since mid-2008.

Earlier, Tokyo's Nikkei index ended up 1.45 percent.

MSCI's all-world index, which tracks 9,000 stocks in 45 countries, slipped 0.08 percent to 362.19. It was set to rise for a second straight week.

Weaker stock prices increased the appeal of bonds and gold. Benchmark 10-year U.S. Treasury notes were up 12/32 in price to yield 1.9947 percent, while German Bund futures were 0.19 percent higher at 143.42.

Gold inched up 0.34 percent to $1,594.69 an ounce, on its way to a weekly gain of 1.1 percent.

DOLLAR RECEDES

The dollar took a breather from its recent sprint higher as well, slipping 0.55 percent against a basket of major currencies and moving away from the seven-month high touched on Thursday.

The euro rose 0.61 percent to $1.3082, recovering from Thursday's three-month low of $1.2911, and was on course for a second consecutive weekly gain against the dollar.

Perceptions that U.S. inflation remains mild despite a spike in gasoline prices earlier this year have eased fears the Federal Reserve would need to consider an early exit from its aggressive quantitative easing policy that has helped support asset prices around the world.

In the oil market, crude prices drew strength from the better U.S. economic outlook and concerns over supply from the Middle East.

U.S. crude oil gained 31 cents to $93.34 a barrel while Brent rose $1.17 a barrel to $110.13.

Supply worries resurfaced when President Barack Obama, ahead of a visit to Israel next week, said military force remained an option if sanctions and diplomacy failed to thwart Iran's nuclear ambitions.

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