* Treasuries prices fall further on Midwest report
* Dollar climbs off 3-week low
* Wall Street flat in mixed trading after strong Midwest
By Herbert Lash
NEW YORK, May 31 U.S. and German bond yields
rose and the dollar advanced on Friday after improved factory
activity in the U.S. Midwest and rising consumer sentiment
sparked a move out of safe-haven assets.
But investors remained cautious on U.S. stocks while
equities on world markets were generally lower, led by declines
The dollar advanced after data showed U.S. Midwestern
factory activity regaining speed.
While the factory data added fuel to growing speculation the
Federal Reserve may begin to taper its asset-buying program, the
Fed's favorite gauge of inflation showed price rises well under
its target rate, making a pullback less likely anytime soon.
U.S. and German government debt prices reversed course and
fell after the Institute for Supply Management-Chicago business
barometer rose to 58.7 from 49 in April, handily beating
economists' expectations for a reading of 50.
The dollar rose against several key currencies and was
headed for its eighth straight month of gains against the yen.
Investors and traders are grappling with whether the Fed,
looking at a stronger economy, will choose to end its program as
stocks and housing prices surge.
"If you get the hint or the idea that they're going to start
to trim purchases then this is the volatility that's going to be
created around it," said Sean Murphy, a Treasuries trader at
Societe Generale in New York.
The Dow Jones industrial average was up 0.38 point,
or 0.00 percent, at 15,324.91. The Standard & Poor's 500 Index
was down 1.94 points, or 0.12 percent, at 1,652.47. The
Nasdaq Composite Index was up 2.43 points, or 0.07
percent, at 3,493.73.
Wall Street got a boost from a Thomson Reuters/University of
Michigan survey that showed greater optimism over the economic
outlook and personal finances pushed U.S. consumer sentiment to
its highest level in nearly six years in May.
A measure of global equities, MSCI's all-country world
equity index, fell as much as 0.7 percent,
though it recovered somewhat to trade 0.63 percent lower.
The benchmark 10-year U.S. Treasury note fell
20/32 in price to yield 2.189 percent.
German Bund futures also retreated in rocky trade
to trade down 19 ticks at 143.54.
In Europe, the FTSEurofirst 300 index leading
regional shares finished 0.92 percent lower at 1,216.17, the
lowest close since earlier in the month.
The index rose 1.6 percent in May to record the best monthly
winning streak in its 16-year history.
The euro fell to a session low of $1.2945 and was
last at $1.2965, down 0.64 percent on the day.
The dollar rose 0.15 percent to 100.87 Japanese yen.
A measure of global stock markets was down
0.6 percent at 369.56.
U.S. oil prices fell below $93 a barrel, extending losses
after weak consumer spending data. Members of the Organization
of Petroleum Exporting Countries agreed to leave their output
target unchanged, as expected, with little impact on markets as
Brent oil was $1.11 lower at $101.08 a barrel, while
U.S. oil was down 75 cents at $92.86 a barrel.