* Gold hits three-week high as Ukraine tensions simmer
* Oil slips below $108 a barrel on Chinese factory data
* Yen at two-week high vs dollar on soft China data (Adds oil settlement prices)
By Herbert Lash
NEW YORK, May 5 (Reuters) - Global equity markets were steady on Monday as upbeat U.S. data offset a contraction in Chinese manufacturing that renewed concerns about a slowing economy in China, while escalating tensions in Ukraine underpinned safe-haven gold.
Shares edged higher on Wall Street after European equity markets declined, as Ukraine’s interior minister drafted a new special forces unit into Odessa and pro-Russian rebels shot down a Ukrainian helicopter near the eastern town of Slaviansk.
The violence in Odessa, a southwestern port with a broad ethnic mix, from Russians and Ukrainians to Georgians and Tatars, was seen as a turning point in Kiev, encroaching for the first time into an area beyond the Russian-speaking east.
U.S. equities rebounded after the Institute for Supply Management said its services sector index rose to 55.2 in April, the fastest pace in eight months, from 53.1 in March, topping expectations for a read of 54.1.
The data provided further evidence that the U.S. economy is emerging from a lackluster winter, a lull largely blamed on inclement weather.
“It’s more confirmation the economy is strengthening and we are headed for stronger growth,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
“Unfortunately, we had those headlines out of Ukraine where the situation seems to be escalating, but once the market realized the economy is doing better we saw the snapback.”
MSCI’s all-country world stock index pared losses to trade flat, while the euro zone’s blue-chip Euro STOXX 50 index also pared losses to close 0.21 percent lower at 3,171.29.
Markets in London were closed for a public holiday.
On Wall Street, the Dow Jones industrial average rose 26.14 points, or 0.16 percent, to 16,539.03. The S&P 500 gained 3.48 points, or 0.18 percent, to 1,884.62 and the Nasdaq Composite added 12.411 points or 0.3 percent, to 4,136.308.
Pfizer Inc, the biggest U.S. drugmaker, weighed on the Dow Industrials after it reported revenue well below expectations. Shares fell 2.8 percent to $29.89.
Shares of Apple Inc provided the most upside to the S&P 500, gaining 1.2 percent to $599.50.
Gold prices hit three-week highs in thin trade, extending the previous session’s gains, fueled by the simmering tensions in Ukraine.
U.S. gold futures for June delivery settled $6.40 higher at $1,309.30 an ounce.
The data on China’s manufacturing sector weighed on crude oil prices. A private survey on Monday showed that the Chinese manufacturing sector contracted for a fourth consecutive month in April.
HSBC/Markit purchasing managers’ index for April came in at 48.1, lower than a preliminary reading of 48.3, but up slightly from an eight-month low of 48.0 in March. A reading below 50 indicates contraction.
Oil slipped below $108 a barrel.
Brent crude for June delivery fell 87 cents to settle at $107.72 a barrel. U.S. crude settled down 28 cents at $99.48 a barrel.
The safe-haven yen rose to a two-week high against the dollar on the Chinese data.
The greenback fell as low as 101.84 yen, its weakest level since April 17 and down more than 1 yen from Friday’s near one-month high of 103.025 yen on trading platform EBS. It was last trading at 102.07, down 0.11 percent on the day.
The dollar index was down 0.04 percent, while the euro was 0.09 percent higher against the dollar at $1.3882.
U.S. Treasuries eased, giving up early gains, with the 10-year note down 4/32 to yield 2.6077 percent. (Reporting by Herbert Lash; Additional reporting by Catherine Evans in London; Editing by James Dalgleish, Leslie Adler and Nick Zieminski)