* Investors assess equity outlook after this year's rally
* Euro dips ahead of ECB meeting on Thursday
* Yen near 3-year low vs dollar, euro over BOJ leadership
By Herbert Lash and Wanfeng Zhou
NEW YORK, Feb 6 U.S. and world stock markets
paused for breath on Wednesday after a rally that drove the S&P
500 to five-year highs, while the euro slipped ahead of a
European Central Bank meeting that could reveal concerns about
the currency's strength.
European equities sank to two-month lows after a run of weak
corporate earnings and signs of disagreement between Germany and
France over the exchange rate for the euro dented
The ECB is widely forecast to keep rates at a record low
0.75 percent when it meets on Thursday, but the euro's strength
may lead policymakers to examine whether the strong currency is
undermining recovery in troubled economies like Spain.
On Wall Street, the S&P 500 has gained 6 percent so far this
year, lifting the benchmark equity index to highs last seen in
December 2007 but giving investors pause. The Dow briefly
climbed above 14,000 for the first time in more than five years
during the rally.
"You knew a correction was coming," said Gordon Charlop,
managing director at Rosenblatt Securities in New York. "The
question was whether they were going to tease you and get it
close and then start selling it off or get it up to 14,000 and
then start to make a move to the sell side," he said.
At midday in New York, the Dow Jones industrial average
was up 6.15 points, or 0.04 percent, at 13,985.45. The
Standard & Poor's 500 Index was up 0.79 points, or 0.05
percent, at 1,512.08. The Nasdaq Composite Index was up
2.24 points, or 0.07 percent, at 3,173.82.
The FTSEurofirst 300 was down 0.2 percent at
1,152.12. MSCI's all-country world equity index
rose 0.15 percent to 355.50.
After France complained about the euro's level, German
Chancellor Angela Merkel's spokesman said the currency was not
over-valued and that competitiveness could not be achieved via
Against the dollar, the euro was 0.4 percent lower at
"The focus is speculation over tomorrow's ECB statement and
President Draghi's press conference," said Camilla Sutton, chief
currency strategist at Scotia Capital in Toronto. "We expect
President Draghi to sound notably cautious and EUR to weaken on
the back of it."
Japan's yen, at the center of concerns that some countries
are trying to devalue their currencies to boost growth, hit a
near-three-year low earlier in the day on the view a new Bank of
Japan governor will ease policy aggressively once in office.
The yen fell 0.10 percent to 93.54.
The yen's decline helped spur a huge gain in Japan's Nikkei
index to its highest in more than four years.
Crude oil futures recovered from early losses. Brent futures
rose 45 cents to $116.97 a barrel. U.S. light sweet
crude oil gained 19 cents to $96.83 a barrel.
U.S. government debt prices rose on weaker stocks, while
nagging worries about possible political shake-ups in Italy and
Spain also rekindled demand for safe-haven bonds.
The benchmark 10-year U.S. Treasury note was up
3/32 in price to yield 1.9027 percent.