* European shares mixed, off highs; Germany gets data boost
* U.S. equities edge up, Treasuries ease
* Puerto Rico bond sale brings in tons of investors
* China growth worries hit materials prices
By David Gaffen
NEW YORK, March 11 Major world equity markets
were mildly negative on Tuesday, the euro edged down and gold
rose as traders kept an eye on tensions between Ukraine and
Russia and the pace of growth in China.
Credit market investors, meanwhile, were jumping all over
Puerto Rico's $3.5 billion municipal bond sale, which attracted
huge interest from many types of funds, including hedge funds
and high-net-worth names.
Markets have taken a break from recent volatile trading, and
moves in most major stock markets were relatively muted. An
index of global stocks slipped, while the
benchmark U.S. S&P 500 was lower as well.
"The market has growing pains here, and rightfully so," said
Peter Cardillo, chief market economist at Rockwell Global
Capital in New York.
"Basically we are at high levels, there are a lot of
warnings out there, a lot of signs the market may be topping
The U.S. Treasury market was muted, with the 10-year yield
slightly lower to 2.769 percent, rising 3/32 in price. The
activity in credit markets was focused on the municipal sector,
where the island of Puerto Rico sold $3.5 billion in debt to
shore up its struggling finances.
The bonds sold at an 8 percent coupon with a yield of 8.727
percent, levels much less expensive than expected in that
market, and several other Puerto Rico bonds were seeing
additional buying as non-traditional investors, including hedge
funds, took the opportunity to grab this high-yield debt.
"For investors, this is a great return, and we've heard
there was a lot of high net worth interest in this deal. These
are tax-sensitive investors and they were heavily pitched on
it," David Tawil, co-founder of Maglan Capital in New York.
The Dow Jones industrial average fell 46.85 points or
0.29 percent, to 16,371.83, the S&P 500 lost 6.07 points
or 0.32 percent, to 1,871.1 and the Nasdaq Composite
dropped 11.139 points or 0.26 percent, to 4,323.309.
Economic figures were limited on Tuesday. A sharp fall in
wholesale sales surprised investors and led to a buildup in
inventories in January, particularly in autos and machinery
stocks. Wholesale inventories rose 0.6 percent. This is a
positive for first-quarter growth, though economists expect the
weak sales figure to be reversed.
The euro fell against the dollar and the yen on Tuesday
after European Central Bank (ECB) Vice President Vitor
Constancio told investors that they may have missed the message
on policy that rates are set to remain accommodative for some
time to come.
Strong trade data from Germany, the region's economic
powerhouse, helped the country's DAX index outperform,
as it rose 0.9 percent.
"Recent events, especially concerning Russia and Turkey,
have made the outlook less certain, and their impact will only
be felt in a few months from now," said Markus Huber, a senior
sales trader at Peregrine & Black.
Tensions over Ukraine continued to build on Tuesday. With
diplomacy at a standstill, Ukraine's acting president announced
the formation of a volunteer national guard, while ousted leader
Viktor Yanukovich insisted he remained the country's legitimate
Turkish assets have been hit by political scandals and a
power struggle between Prime Minister Tayyip Erdogan and a
U.S.-based Muslim cleric.
Investors worried about the pace of growth in China have
taken out their frustrations on Chinese steel futures and spot
iron ore prices of late. Steel rebar futures traded on the
Shanghai Futures Exchange hit their lowest levels ever and spot
iron ore prices posted the biggest one-day fall in over four
years on Monday after China's trade balance swung into deficit
Against a basket of currencies, the U.S. dollar edged
higher by late morning to trade up 0.01 percent.
Gold extended early gains as Ukraine strengthened the
bid in that market. The yellow metal was at $1,346 an ounce. In
a sign of the recent jump in demand, the world's biggest
bullion-backed exchange-traded fund saw its largest inflow in a
month on Monday.
Brent crude, Europe's regional benchmark, edged up 34 cents
to $108.44 a barrel, while U.S. oil slipped 81 cents to