GLOBAL MARKETS-Dollar gains after selloff; stocks nearly flat

Fri Jul 12, 2013 2:01pm EDT

* 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
    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. 

    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.
    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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