(Updates stock prices)
* Dollar tumbles to 3-1/2-month low vs yen as debt yields
* Brent retreats below $110 on Libya violence, fall in
* Bond prices edge higher on expectations of lower yields
By Herbert Lash
NEW YORK, May 19 Global equity markets traded
near break-even on Monday as Pfizer's failed bid for AstraZeneca
weighed on European shares but helped lift Wall Street, while
declining yields on government debt also helped U.S. stocks to
AstraZeneca rejected a sweetened and "final" offer
from Pfizer, sending the British drugmaker's shares down
more than 11 percent in London and making it the biggest weight
on a pan-European index of leading regional companies.
Pfizer's shares rebounded on the failed bid, making it the
second-largest contributor to a rise in the S&P 500 index after
Apple. Pfizer rose 1.27 percent to $29.49 a share, while
AstraZeneca closed at 42.875 pounds in London.
Treasuries, meanwhile, rallied. Yields on the benchmark
10-year U.S. Treasury note fell to 2.51 percent, near lows last
seen in October.
Analysts had expected interest rates to rise, but with rates
touching seven-month lows, the bond rally has helped U.S. stocks
from falling further and kept at bay a long-expected correction.
"The big story is the bond market, that is the one thing
that stands out like a sore thumb," said Stephen Massocca,
managing director at Wedbush Equity Management LLC in San
"If we did not get this big decrease in rates, the (stock)
market would've corrected," Massocca said. "it is maybe
preventing a decline of which we are a little overdue in the
stock market, from a valuation perspective."
The Dow Jones industrial average fell 2.34 points or
0.01 percent, to 16,488.97. The S&P 500 gained 4.8
points, or 0.26 percent, to 1,882.66 and the Nasdaq Composite
added 29.796 points, or 0.73 percent, to 4,120.384.
Tim Ghriskey, chief investment officer of Solaris Group in
Bedford Hills, New York, said equity investors still see an
improving U.S. economy yet the bond market sees otherwise.
"You really have this dichotomy going in and nobody is
winning and we are stuck in neutral a bit because of that,"
MSCI's all-world equity index, which tracks
shares in 45 nations, rose 0.05 percent to 415.
The pan-European FTSEurofirst 300 index, which last
week hit a 6-year high of 1,372.81 points, was down 0.19 percent
at 1,358.91 points.
U.S. Treasuries prices edged higher on sentiment that bond
yields could hit multi-month lows again, leading investors to
mainly seek longer-dated bonds to avoid price losses.
"When we get this dropping of yield, the folks that have not
participated have really lagged from a performance perspective,"
said Justin Hoogendoorn, fixed income strategist at BMO Capital
Markets in Chicago. "You don't want to be caught off-side."
Benchmark 10-year U.S. Treasury notes were last
up 1/32 in price to yield 2.5142 percent.
The dollar fell to its lowest in more than three months
against the yen, pressured by the drop in U.S. Treasury yields
that may be due to persistent uncertainty about U.S. economic
The dollar fell as low as 101.11 yen, the weakest
since early February. It was last at 101.28, down 0.21 percent.
The euro gained 0.14 percent on Monday to $1.3711.
Brent crude rose above $110 a barrel on renewed concerns
over Libya's oil output following some of the worst violence in
Tripoli since the 2011 war against Muammar Gaddafi.
Brent later retreated. Brent fell 8 cents to $109.67
a barrel. U.S. crude rose 91 cents to $102.93.
(Additional reporting by Natsuko Waki in London, reporting by
Herbert Lash; Editing by Chris Reese and Chizu Nomiyama)