GLOBAL MARKETS-U.S. stocks near record high; report on ECB lifts euro

Wed Aug 27, 2014 12:07pm EDT

* S&P 500 holds above 2,000, Dow hovers near record peak

* Euro bounces from 13-month low on report ECB may not act soon

* German Bund, euro bond yields reach record lows (Updates market action)

By Richard Leong

NEW YORK, Aug 27 (Reuters) - The euro rebounded from a 13-month low on Wednesday after a report suggested the European Central Bank might not introduce more stimulus next week while major U.S. stock indexes were little changed, with the S&P 500 hovering just above the 2,000 milestone.

Reuters in a report on Wednesday cited ECB sources who said the bank is unlikely to embark on new policy measures at its meeting next week unless August inflation figures due on Friday signal the 18-nation block is moving closer toward deflation.

Traders said the report cooled earlier expectations of ECB action at its Sept 4 meeting after ECB President Mario Draghi's call for more policy action last week.

Bets that the ECB is on the brink of introducing a bond purchase program to inject more stimulus into the euro zone economy had earlier driven the euro to its weakest level against the dollar in 13 months. The speculation also drove the region's government bond yields to record lows and spurred a rise in European share prices for a third day.

Among key commodities, Brent crude oil rose on reduced supply from a large oil field in the North Sea due to additional maintenance.

Gold climbed as the dollar retreated against a basket of major currencies.

Investors were wary about piling into equities and other risky assets after Ukraine accused Russian forces of a fresh military incursion across its border.

"Global sovereign bonds and global equities are continuing to rally together, which is clearly unsustainable in the short term," said Michael Woolfolk, global markets strategist at BNY Mellon in New York.

In midday trading, the Dow Jones industrial average was up 8.4 points, or 0.05 percent, at 17,115.1, the S&P 500 was flat at 2,000.07, and the Nasdaq Composite was 0.33 points, or 0.01 percent, lower at 4,570.30.

The pan-European FTSEurofirst 300 index provisionally closed up 0.1 percent at 1,378.24 points. Tokyo's Nikkei ended up 0.1 percent at 15,534.82.

The MSCI world equity index, which tracks shares in 45 nations, rose 0.41 point, or 0.09 percent, to 432.05.

Prior to the Reuters report that suggested the ECB might not act next week, speculation of imminent ECB easing had intensified on comments from Italy's economy minister, Pier Carlo Padoan, who said Italy must lower its growth forecast for this year, and on data showing a fall in German consumer sentiment for the first time since early last year.

The yield on the benchmark German Bund was last at 0.913 percent after earlier hitting a record low of 0.896 percent. Yields fell across the euro zone but were off earlier lows.

The euro broke to an 13-month low of $1.3151 in Asian trade on Wednesday before hitting a session high at $1.320, up about 0.3 percent on the day.

The rebound in the euro weighed on the dollar index, which was down 0.23 percent at 82.46.

As the greenback softened against major currencies, gold clung to a 0.1 percent gain at $1,281.56 an ounce.

Brent crude was up 7 cents, or up 0.07 percent, at $102.57 a barrel, while U.S. crude was last down 8 cents, or 0.09 percent, at $93.78 per barrel. (Additional reporting by Jamie McGeever, Nigel Stephenson, John Geddie and Anirban Nag in London and Wayne Cole in Sydney; Editing by James Dalgleish and Leslie Adler)