GLOBAL MARKETS-Global stocks inch up, US dlr dips as central bank action eyed
* U.S. Midwest business activity contracts in April; US dollar falls * Fall in euro zone inflation adds to ECB rate cut case * Apple announces largest non-bank bond deal in history By Caroline Valetkevitch NEW YORK, April 30 (Reuters) - Stocks on major markets edged higher on Tuesday while the U.S. dollar fell to a two-month low on expectations of further supportive actions by U.S. and European central banks. Investors await the release of the Federal Reserve's policy statement on Wednesday as well as the European Central Bank's announcement on Thursday. Investors believe the Fed will continue with its bond buying program in response to recent weaker U.S. economic data, while the European Central Bank may cut its benchmark interest rate. Apple wowed debt markets with the largest non-bank bond deal in history, offering $17 billion for sale. U.S. Treasuries erased early gains ahead of the debt sale, while shares of the tech company shot up 3.2 percent to $443.75. The S&P 500 was slightly higher after data showing an unexpected contraction in business activity in the U.S. Midwest was offset by a report showing U.S. home prices rose in February at their fastest rate in almost seven years. At the same time, the U.S. dollar was being driven by views on the Fed as investors watch to see if the sluggish economic recovery and slowing inflation might not only end talk of slowing the Fed's bond-buying, but also push the Fed into buying more assets. Weakness in the dollar "is mainly speculation on further Fed quantitative easing policy," said Ulrich Leuchtmann, head of FX research at Commerzbank. "The view that the Fed would scale down QE is coming more and more under question due to poor U.S. data." The dollar index, which measures its value against a basket of six major currencies, hit its lowest since the end of February at 81.598. It was last down 0.4 percent at 81.785. The euro rose as high as $1.3185, the strongest since April 17. On Wall Street on Tuesday, the Dow Jones industrial average was down 7.27 points, or 0.05 percent, at 14,811.48. The Standard & Poor's 500 Index was up 0.46 points, or 0.03 percent, at 1,594.07. The Nasdaq Composite Index was up 14.05 points, or 0.42 percent, at 3,321.07. U.S. stocks have mostly rallied since the start of the year, and the S&P 500 closed at a record high on Monday. MSCI's world equity index was up 0.4 percent, while the pan-European FTSEurofirst 300 index ended down 0.2 percent. Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.1 percent to a seven-month high. APPLE COMES TO DEBT MARKET Just a week after announcing its first drop in quarterly earnings in a decade, Apple offered the massive deal to raise funds for an ambitious program that will return $100 billion in cash to holders of Apple shares. Sources said investors could barely submit orders fast enough to get in on the deal from Apple, the only major tech company without a single penny of debt on its books. The $17 billion size easily trumps the previous biggest single deal according to Thomson Reuters/IFR data, a $14.7 billion deal from Abbott Laboratories spin-off AbbVie last November. In the U.S. Treasury market, the benchmark 10-year U.S. Treasury note was last down 1/32, with the yield at 1.6717 percent. But participants said Treasury yields were likely to stay low and that the yield curve would tend to flatten, narrowing the difference between short- and long-term yields. "Greater economic weakness out of Europe with higher levels of unemployment and ebbing inflation - that theme is starting to gain greater momentum," said Wilmer Stith, co-portfolio manager of the Wilmington Broad Market Bond Fund in Baltimore, Maryland. EUROPEAN DATA WEAK; US DATA MIXED In the United States, the S&P/Case-Shiller index of 20 metropolitan areas showed single-family home prices rose 9.3 percent in February from a year earlier, the fastest pace since May 2006, which was seen as another sign of the housing market recovery. Another U.S. report showed consumer confidence rebounded in April as Americans felt better about the outlook for the economy and their income prospects. Both helped offset news that the Institute for Supply Management-Chicago business barometer fell to 49, below the 50 mark that denotes contraction. Data out of Europe on Tuesday bolstered views the ECB will cut interest rates when it meets on Thursday. Inflation in the euro zone hit a three-year low and unemployment rose to a record high, the EU statistics office reported. Adding to worries, German retail sales unexpectedly fell in March while Spain's economy shrank for the seventh straight quarter in the first three months of the year. "It's looking more and more likely that the European Central Bank will indeed cut its main refinancing rate on Thursday while the Federal Reserve will stand pat on Wednesday," said Brian J. Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin. A cut in the ECB benchmark rate by 25 basis points to a record low of 0.5 percent after its policy meeting on Thursday has been largely factored in by financial markets, though many analysts and dealers still harbor some doubts it will happen. In the commodity markets the growth concerns, heightened by the recent run of weak economic data around the world, largely outweighed the hopes of further central bank support. Brent crude dropped $1.61 to $102.20 a barrel. U.S. crude was $1.14 lower at $93.36 a barrel. Gold fell as investors remained on the sidelines ahead of central banks meetings. Gold was down 0.4 percent at $1,469.64, after gaining nearly 1 percent on Monday.
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