GLOBAL MARKETS-Stocks hold steady; sterling near five-year high

Thu May 1, 2014 11:33am EDT

* Dow slips from record closing high
    * U.S., UK factory data beat forecasts; China PMI misses
    * Oil prices fall on China; gold loses shine after Fed
outlook
    * May Day holiday mutes trading volume in Europe, Asia

 (Updates market action, changes byline, dateline previously
LONDON)
    By Richard Leong
    NEW YORK, May 1 (Reuters) - World stock prices held steady
on Thursday on solid corporate earnings, while sterling hit a
near five-year high on unexpectedly strong data on the British
factory sector, which posted its strongest level in five months.
    Equities markets overcame a brief hiccup after data on
China's vast manufacturing sector missed forecasts.
    "Globally, things are fairly valued," said Jason Pride,
director of investment strategy at Glenmede in Philadelphia.
"There is no reason for a material downside for stocks right
now."
    With stocks steady, bond prices were little changed, and
benchmark U.S. yields held near two-week lows. 
    But the disappointing data on Chinese manufacturing activity
pressured oil prices, driving them to a three-week low. Gold
prices fell 1 percent a day after the U.S. Federal Reserve
reiterated confidence in the U.S. economic outlook despite weak
first-quarter growth.
    May Day holidays in Europe, much of Asia and parts of Latin
America reduced trading volume, mitigating the impact of the
Chinese data, a day after the stunningly weak data on U.S.
economic growth.
    China's official manufacturing PMI came in at 50.4 in April,
up a tick from March but below forecasts of 50.5, stoking
concerns about the world's No. 2 economy. A reading above 50
indicates expansion.
    On the other hand, the latest manufacturing data on the
United States and Britain surpassed expectations, signaling
economic momentum in both countries. 
    The Institute for Supply Management said its index on U.S.
factory activity rose to its highest level since December, while
Markit reported its UK manufacturing gauge rose to its strongest
level since November. 
    Sterling hit its highest level against the dollar
in nearly five years, and last traded at $1.6894. It rose toward
a two-month high against the euro, last quoted at 1.2173 euro
. 
    The greenback held steady against other currencies. The
dollar index, which tracks the greenback versus a basket
of six currencies, rose 0.06 percent to 79.524.
    London's blue-chip FTSE index gained 0.2 percent,
hitting a seven-week high, boosted by results from Lloyds
Banking Group and TV and media group BSkyB.
 
    On Wall Street, the factory data gave a mild lift to
investor appetite, although the Dow Jones Industrial average
dipped below its record close set on Wednesday.
    In mid-morning trading, the Dow fell 3.76 points or
0.02 percent, to 16,577.08, the S&P 500 gained 1.01
points, or 0.05 percent, to 1,884.96, and the Nasdaq Composite
 added 18.092 points, or 0.44 percent, to 4,132.647. 
    The Commerce Department reported that consumer spending,
which accounts for more than two-thirds of U.S. economic
activity, jumped 0.9 percent in March, which was was the biggest
gain since August 2009. 
    "This is a bit more of a confirmation that there is momentum
building in the economy," said Carl Riccadonna, senior U.S.
economist at Deutsche Bank in New York. 
    Not all signs on the economy were positive. First-time
claims for U.S. jobless benefits rose more than expected,
supporting the view the Federal Reserve is unlikely to raise
short-term interest rates until the second half of 2015.
    The claims figures did not, however, alter the view for
fairly strong payrolls data for April The government's monthly
labor market report is to be released on Friday. Economists
polled by Reuters projected a 210,000 increase in jobs. 
 
    Earlier, upbeat earnings helped Japanese stocks stage their
biggest rally in two weeks. The Nikkei closed 1.3
percent higher. 
    The MSCI world equity index, which tracks
shares in 45 nations, rose 0.71 points or 0.17 percent, to
414.8.
      
    
    In commodity markets, oil stayed under pressure after stocks
of the fuel in the United States hit a record high.
    Brent crude for June delivery was last down $1.10,
or 1.02 percent, at $106.97 a barrel. U.S. crude was last
down 45 cents, or 0.45 percent, at $99.29 per barrel. 
    Spot gold prices fell $11.73 or 0.91 percent, to
$1,279.56 an ounce.

 (Additional reporting by Marc Jones in London; Wayne Cole in
Sydney; Editing by Leslie Adler)
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