* Treasury yields rise as U.S. housing data beats expectations
* Dollar steady as housing data stems U.S. yield drop
* Brent rises above $109, Libya oil recovery short-lived (Adds oil settlement)
By Herbert Lash
NEW YORK, May 16 Global equity markets turned higher late on Friday after being down most of the session on concerns about economic growth, while government debt prices fell on surprisingly strong U.S. housing data.
Major U.S. stock indexes were still on track for a negative week, with small-caps down for a fourth straight session, despite the benchmark S&P 500 hitting a record high earlier in the week and Wall Street turning slightly positive on Friday.
A monthly gauge of U.S. consumer sentiment fell in May as a gloomy view on income growth clouded an otherwise positive economic outlook, a preliminary reading of the Thomson Reuters/University of Michigan survey showed.
But the Commerce Department said U.S. housing starts jumped in April and building permits hit their highest level in nearly six years, a report that offered hope the troubled American housing market could be stabilizing.
The sentiment data provided fodder to those who expect the economy to struggle in the second half of the year, while the housing data bolstered those who see stronger growth ahead. Weighing on that tug-of-war were expectations of a market correction.
MSCI's all-country world index was up 0.1 percent but still off a high set on Thursday. The pan-European FTSEurofirst 300 index closed up 0.3 percent.
The Dow Jones industrial average was up 33.43 points, or 0.20 percent, at 16,480.24. The Standard & Poor's 500 Index was up 5.00 points, or 0.27 percent, at 1,875.85. The Nasdaq Composite Index was up 15.75 points, or 0.39 percent, at 4,085.04.
The Russell 2000 index of small-cap companies briefly entered correction territory on Thursday, defined as a 10 percent decline from a recent high. It subsequently pulled back and was about 9.3 percent below its high in morning trading on Friday.
"We're in the middle of a rolling sector correction, where some areas of the market are performing better than others," said Jerry Harris, president of asset management at Sterne Agee in Birmingham, Alabama, who noted the S&P 500 hit an all-time record on Tuesday.
U.S. Treasuries prices fell after the better-than-expected housing data pointed to a strengthening economy, pulling yields on benchmark 10-year noted up from six-month lows. They fell 5/32 in price to yield 2.5178 percent.
The dollar held steady against major currencies as selling of the currency faded with U.S. yields stabilizing.
The dollar traded at 101.48 yen, down 0.08 percent and rose against the euro, up 0.09 percent at $1.3697.
Brent crude oil rose above $109 a barrel after a recovery in Libyan oil supply proved short-lived and as tension simmered over Ukraine.
Brent crude rose 66 cents to settle at $109.75 a barrel. U.S. crude climbed 52 cents to settle at $102.02.