* Bonds rise on safety buying
* Russia says Ukraine on brink of civil war
* Brent oil falls as investors weigh Libya, Ukraine
(Adds close of European bond, stock markets)
By Herbert Lash
NEW YORK, April 15 Global equity markets
declined and government debt rose on Tuesday over rising
tensions in Ukraine after Russia declared the country on the
brink of civil war and as disappointing corporate results dogged
U.S. and European stock markets.
The New York Federal Reserve said its Empire State general
business conditions index fell to a five-month low of 1.29 in
April from a reading of 5.61 the month before, pulled down by a
plunge in new orders.
A separate report showed confidence among U.S. homebuilders
remained downbeat as the NAHB/Wells Fargo Housing Market index
rose only a point to 47 in April, the third month in a row it
was below 50. Readings below 50 mean more builders view market
conditions as poor than favorable.
Worries over escalating tension in Ukraine and weak results
by bellwethers including Nestle held back stocks in
Europe. Most of Wall Street traded flat but Nasdaq slumped on
another round of selling in technology and biotech names.
The momentum stocks, those believed by investors to have
high growth potential, have been under pressure after soaring
prices took their valuations to unsustainable levels.
The Nasdaq Biotech index dropped 1.1 percent.
"They reached a level where the pricing was absurd in terms
of the valuation of these companies, and for whatever reason,
the market has woken up to the fact and is now correcting to get
them back down to a reasonable valuation," said Stephen
Massocca, managing director of Wedbush Equity Management LLC in
"And suddenly everyone realizes the emperor has no clothes."
Russia declared Ukraine on the brink of civil war as Kiev
said an "anti-terrorist operation" against pro-Moscow
separatists was under way, with troops and armored personnel
carriers seen near a flashpoint eastern town.
"We're cautious in the short term, we're waiting to see how
the geopolitical situation evolves. There are a lot of
uncertainties about Ukraine, which could become a negative
catalyst for stocks if things spin out of control," said
Barclays France director Franklin Pichard.
MSCI's all-country world stock index fell
0.35 percent, while the FTSEurofirst 300 index of top
European shares closed down 0.96 percent at 1,306.85.
The Dow Jones industrial average rose 6.96 points, or
0.04 percent, to 16,180.2. The S&P 500 gained 1.38
points, or 0.08 percent, to 1,831.99 and the Nasdaq Composite
dropped 24.936 points, or 0.62 percent, to 3,997.759.
Corporate results also weighed on U.S. stocks. Of the 36
companies in the S&P 500 that have reported earnings to date for
the first quarter, 52.8 percent have reported earnings above
In a typical quarter over the past two decades, 62 percent
of companies beat estimates.
U.S. Treasuries prices gained as the rising tensions in
Ukraine sparked a safety bid for U.S. bonds. The weak New York
state manufacturing survey and housing data pointed to sluggish
Benchmark 10-year notes were up 6/32 in price to
yield 2.6175 percent.
The dollar pared gains against the euro after traders
discounted comments from European Central Bank policy-makers and
a slight uptick in U.S. inflation did not suggest a potential
change in the Federal Reserve's dovish monetary stance.
The euro recovered against the dollar after ECB President
Mario Draghi indicated on Saturday that the central bank would
act to prevent deflation in the euro zone.
The impact of Draghi's comments receded somewhat, with
traders awaiting more decisive action from the ECB.
The dollar edged up against the euro, trading up 0.05
percent against the dollar at $1.3812.
The dollar was down 0.06 percent against the Japanese yen
at 101.76, and was up 0.01 percent against the Swiss
franc to trade at 0.8797 francs.
The U.S. dollar index was last up 0.07 percent.
Brent crude fell further below $109 as investors weighed the
prospect of a gradual recovery in Libyan oil exports against
rising tension between Russia and Ukraine.
Brent shed 17 cents to $108.90 a barrel. U.S. oil
dropped 20 cents to $103.85 a barrel.
(Additional reporting by Jamie McGeever in London, reporting by
Herbert Lash; Editing by Chizu Nomiyama)