GLOBAL MARKETS-Dollar gains after selloff; stocks nearly flat
* World stock index on track for best week since January * Dollar bounces, currencies steadier after wild ride * U.S. stocks little changed; oil climbs By Caroline Valetkevitch NEW YORK, July 12 (Reuters) - The dollar bounced back from a steep selloff on Friday while world stock indexes were nearly flat as investors' focus shifted to mixed U.S. corporate earnings. Gold dipped as the dollar rebounded and investors booked profits after four days of gains, but was on track for its biggest weekly advance in nearly two years. Stocks, bond prices and commodities have rallied this week while the dollar tumbled on hints from Federal Reserve Chairman Ben Bernanke that the U.S. central bank was unlikely to phase out its stimulative bond buying before the unemployment rate improved further. U.S. stocks were little changed, a day after the Dow and S&P 500 hit all-time closing highs. However, the S&P 500 was on track to end the week up 2.5 percent, its best weekly performance since January. Stronger-than-expected results from top U.S. banks JPMorgan Chase and Wells Fargo were offset by a disappointing outlook from United Parcel Service Inc, whose shares dropped 5.7 percent to $86.21 and were the biggest drag on the S&P 500. UPS, the world's biggest package delivery company, and smaller rival FedEX are considered economic bellwethers because of the high volume of goods they move around the world. European shares ended down slightly, with mixed economic data and renewed concerns about the political risks in the euro zone prompting investors to lock in profits at the end of the market's best week since April. Investors were also nervous of holding onto positions ahead of the release of Chinese second-quarter economic growth data, due before European markets open on Monday, which will be particularly key to the mining sector. The MSCI world index was down 0.04 percent, but was on track to post its best week since January. The broad FTSEurofirst 300 ended down 0.1 percent. The Dow Jones industrial average was down 8.18 points, or 0.05 percent, at 15,452.74. The Standard & Poor's 500 Index was up 0.41 point, or 0.02 percent, at 1,675.43. The Nasdaq Composite Index was up 4.58 points, or 0.13 percent, at 3,582.89. "I think the market has reason to move higher, but it's had a substantial run now," said Warren West, principal at Greentree Brokerage Services in Philadelphia. Over the past three weeks, the S&P 500 has erased the nearly 6 percent selloff triggered when Bernanke in late May first raised the prospect of trimming the Fed's $85 billion in monthly bond purchases. After a week of swings in the world's big currencies, foreign exchange markets were trading more calmly. The dollar index, which measures the greenback's performance against a basket of major currencies, was up 0.3 percent after having slumped more than 2 percent since Wednesday, when Bernanke assured market participants that the Fed would remain in support mode. It was the steepest fall in four years, normally seen only during financial crises. "There is some argument for suggesting that the shock effect of a dovish Bernanke has largely been digested," said Alan Ruskin, global head of foreign exchange strategy at Deutsche Bank in New York. "Even if he tries to avoid changing his tone, any policy surprises are more likely to be in a positive dollar direction than the reverse," he said. A preliminary reading on the Thomson Reuters/University of Michigan's consumer sentiment index for July was slightly weaker than expected, causing the dollar briefly to pare gains. U.S. Treasury debt prices turned lower as profit-taking emerged. Benchmark 10-year Treasury notes last traded down 2/32, with the yield at 2.5802 percent. GOLD EASES, OIL CLIMBS Commodity markets have also enjoyed a strong run this week as talk of continued central bank support has bolstered hopes of a pickup in global growth. Spot gold was trading down 0.4 percent at $1,279.80 on ounce, having cut some losses. Bullion was on course for its biggest weekly gain in nearly two years on easing fears of an early end to Fed stimulus. Brent oil extended gains and was at session highs in afternoon trading. Brent was last up 97 cents at $108.70 while U.S. crude oil was up 76 cents at $105.67 a barrel. PORTUGAL TENSIONS Portuguese government bonds fell again after Lisbon requested a delay to the next review of a bailout program due to the country's political crisis. Tensions were reignited this week after Portugal's president threw out plans that looked to have patched up a government rift, and instead demanded some kind of grand coalition, which would include opposition Socialists, who are distinctly cool on the government's austerity measures and have been calling for snap elections.
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