* Poor IBM results weigh on S&P, Dow
* Treasury prices down on weaker German government debt
* Dollar firms on bets over Fed stimulus cut
* Sterling shines on expectations for UK rate hike
By Barani Krishnan
NEW YORK, Jan 22 (Reuters) - U.S. stocks finished flat to either side of unchanged on Wednesday as investors played off a mixed bag of company earnings, while the dollar firmed against most major currencies ahead of next week's Federal Reserve meeting where another cut in stimulus is seen possible.
Treasuries fell and benchmark yields edged up from five-week lows, with prices dragged down by weaker German government debt prices.
On Wall Street, IBM missed revenue expectations for a fourth straight quarter, driving down shares of the world's largest technology services company by nearly 4 percent, making them the biggest drag on the market.
Shares of Coach Inc, the luxury handbag maker, also tumbled, stung by disappointing sales in North America.
Even so, there were some bright spots, like United Technologies Corp and railroad company Norfolk Southern , both of which reported strong quarterly earnings.
"We've seen significant decreases in a company's ability to deliver on earnings this quarter ... however, we've also seen signs that the top-line growth we've been looking for is starting to emerge," said Kristina Hooper, head of portfolio strategies at Allianz Global Investors in New York.
"Seeing a broad-based top-line growth trend would really speak to the health of the economy ... that has allowed for the market to hang in there despite some disappointments."
The Dow Jones industrial average closed down 41.10 points, or 0.25 percent, at 16,373.34. The Standard & Poor's 500 Index was up 1.06 points, or 0.06 percent, at 1,844.86. The Nasdaq Composite Index was up 17.24 points, or 0.41 percent, at 4,243.00.
IBM lost 3.3 percent to $182.25, weighing on both the Dow and S&P 500. The company was hit in the latest quarter by weakening demand, particularly in growth markets like China.
Coach tumbled 6 percent to $49.28, the worst performer on the S&P 500, on declining North American sales and market share in the handbag business to fast-growing rivals.
Shares of United Technologies, the world's largest maker of elevators and air conditioners, were up almost 1 percent at $116.12. The company reported higher fourth-quarter profit that topped Wall Street estimates, though revenue fell shy of expectations.
Norfolk Southern posted a 24 percent rise in quarterly income, driving its shares up 4.8 percent to $92.94. The shares had risen more than 6 percent earlier, helping the Dow Jones Transportation average hit a record high.
An upgrade of the International Monetary Fund's world forecasts lifted sentiment in global equities.
World stocks as measured by the MSCI world equity index edged up 0.07 percent.
The pan-European FTSEurofirst closed up 0.1 percent at 1,347.05, leaving it just shy of a multi-year high touched on Tuesday at 1,353.47. The euro zone's blue-chip STOXX 50 shed 0.1 percent to 3,151.27 points.
The dollar slipped against sterling and the Australian dollar while rising against others, as measured against a basket of currencies.
Investors expect the Fed, when it meets next week, to make another $10 billion cut to its monthly bond-buying program after last month's reduction brought its monthly purchases of bonds to $75 billion.
The benchmark 10-year U.S. Treasury note was down 11/32, with its yield at 2.8637 percent. The 10-year yield hit 2.818 percent on Friday, its lowest level since Dec. 11, according to Reuters data.
Sterling hit a three-week high against the dollar and a one-year high against the euro.
The pound rallied after a sharper-than-expected fall in UK unemployment, to 7.1 percent, provided fresh proof of a strengthening economy and bolstered speculation that a Bank of England rate increase may not be too far off.
Minutes from the BoE's last meeting, released at the same time as the data, showed policymakers now acknowledged unemployment was likely to fall to the 7 percent threshold they have set for reviewing the bank's policy, "materially earlier" than expected.
"It will certainly be the big challenge for Bank of England Governor Mark Carney and the (Monetary Policy Committee) in managing the forward guidance," said Michael Hewson, chief strategist at CMC Markets. "What does he do when it does hit 7 percent? ... I think the only way is up for the pound."
Among commodities, oil climbed on expectations that accelerating growth in industrialized economies would lift demand. U.S. crude oil closed up almost 2 percent at $96.73 a barrel, its highest settlement for the year.