* US stocks pare gains on Ukraine tensions ahead of weekend
* US GDP revised sharply downward; other data tops forecasts
* S&P sets intra-day high, leading to European share rebound
* Euro at year's high as ECB expectations cool
By Herbert Lash
NEW YORK, Feb 28 Stocks on Wall Street retreated
late on Friday over Ukraine jitters after surging to new highs
on mostly positive economic data, while the euro hit its highest
level this year as stable inflation cooled expectations of
looser monetary policy.
The benchmark Standard & Poor's 500 stock index rose to an
intraday record high after investors shrugged off a
weaker-than-expected reading of U.S. gross domestic product for
the fourth quarter.
But most stocks on Wall Street pared gains to trade near
break-even to slightly higher late in the session, with Nasdaq
stocks sharply lower.
"The market's gone straight south because there's chatter
about Russia's (involvement) in Ukraine and that's getting
people all jittery. It's sell first and ask questions later on a
Friday afternoon," said Michael James, managing director of
equity trading at Wedbush Securities in Los Angeles.
Jason Weisberg, managing director at Seaport Securities Corp
in New York, said he does not see Ukraine tensions as cause to
sell, "but if people are looking for a reason to sell, this will
fit the bill."
The Dow Jones industrial average rose 25.64 points,
or 0.16 percent, to 16,298.29. The S&P 500 gained 2.23
points, or 0.12 percent, to 1,856.52 and the Nasdaq Composite
dropped 18.43 points, or 0.43 percent, to 4,300.502.
U.S. gross domestic product expanded at a 2.4 percent annual
rate in the fourth quarter, down sharply from the 3.2 percent
pace estimated in January and below the 4.1 percent pace logged
in the third quarter, the Commerce Department said.
But the pace of business activity in the U.S. Midwest rose
slightly in February, beating expectations and snapping a
three-month run of slower growth, the business barometer from
the Institute for Supply Management-Chicago showed.
Also, contracts to buy previously owned U.S. homes edged up
in January after a weather-related hit at the end of 2013, and
U.S. consumer sentiment rose marginally in February even as
concerns about extreme weather persisted, a survey showed.
"The million-dollar question is how much of the slowdown is
because of the weather and how much is because of the economy
getting weaker," said Bill Stone, chief investment strategist at
PNC Wealth Management in Philadelphia, with $125 billion in
assets under management.
"The market continues to believe that weather is behind most
of it, and we generally agree with that, but we will need to see
a pick-up" in growth, he added.
MSCI's all-country world equity index rose
0.32 percent, while stocks in Europe rebounded on the relatively
stronger U.S. data.
Earnings have beaten expectations, helping lift the U.S.
"If you look at how numbers came in for the fourth quarter,
they were really pretty good; the problem was guidance and
outlook was not so great," said Daniel Morris, global investment
strategist at TIAA-CREF.
Optimism at the beginning of the year that the economy would
accelerate has been tempered by corporate caution, he said.
Danish shipper A.P. Moller-Maersk, seen as a
bellwether for the global economy as its vessels account for 15
percent of global container shipping, gave a cautious outlook
when it reported results on Thursday, Morris said.
"Companies aren't jumping up and down saying ,'Hey, we're
really optimistic.' That's what has weighed on the market."
European shares initially dipped as euro zone inflation data
came in at 0.8 percent, 1/10th of a percentage point above
expectations, lessening the prospect of new monetary stimulus
measures from the European Central Bank.
The pan-European FTSEurofirst 300 index
subsequently closed up 0.22 percent at 1,348.39.
The euro gained as traders had expected a slower pace of
inflation in the euro zone and subsequent lower interest rates.
Major currency markets have been broadly stable as investors
retreat from emerging markets to safer bets like the euro,
dollar, yen and Swiss franc.
"The euro certainly looks good, everything is in place for
more gains. But I wouldn't race out and buy it at the moment,"
said Graham Davidson, FX trader with NAB in London.
The euro rose 0.81 percent to $1.3819, its first time
above $1.38 this year. The dollar slipped against the Japanese
yen, falling 0.38 percent 101.72 yen.
Brent oil prices dropped below $109 a barrel as the revised
GDP estimates curbed the demand outlook, but U.S. oil rose on
market talk of decreased supply from the Bakken shale.
Crude oil loadings at a dozen major North Dakota rail
terminals fell by more than 200,000 barrels on average in the
past two days, data from industry intelligence provider Genscape
Ukraine tensions and the new GDP estimates capped gains.
Brent crude rose 11 cents to settle at $109.07 a
barrel. U.S. oil settled up 19 cents to $102.59.
U.S. COMEX gold futures for April delivery settled
down $10.20 at $1,321.60 an ounce.
U.S. Treasury debt prices fell, reversing Thursday's gains,
as stronger-than-expected economic data led to profit-taking and
set the market on track for its biggest weekly loss in a month.
The revised downward estimate to GDP limited losses.
"This is profit taking because rates are so low that any
news that works against bonds tends to bring an exaggerated
reaction," said Jim Vogel, an interest rate strategist at FTN
Financial in Memphis.
The 10-year U.S. Treasury note fell 3/32 in
price, pushing its yield up to 2.6547 percent.