* Equities move lower in U.S., Europe
* Dollar drops to 6-1/2 month low versus currency basket
* Continued tension between Russia, Ukraine weighs on
(Updates prices to U.S. mid-afternoon trading)
By Ryan Vlastelica
NEW YORK, May 6 Stock markets around the world
fell on Tuesday, with U.S. shares extending their decline in
afternoon trading on persisting geopolitical uncertainty, which
pushed investors to take profits with major indexes near record
The U.S. dollar fell 0.48 percent to a 6-1/2-month
low against a basket of currencies, while U.S. bond yields
struggled to pull out of recent troughs and the yen and euro
U.S. stocks dropped, pressured by financial shares following
disappointing results from American International Group.
However, the Dow and S&P 500 remained within striking distance
of record levels.
Investors were watching the ongoing unrest in Ukraine, where
more than 30 pro-Russian separatists were killed in fighting
near the east Ukraine rebel stronghold of Slaviansk, according
to the interior minister. Russia announced plans to beef up its
Black Sea warship fleet.
"Valuations are close to the ceiling and some people may be
uncomfortable because of that, especially given growing
nervousness over the geopolitical tensions," said Bernard
Baumohl, managing director and chief global economist at the
Economic Outlook Group in Princeton, New Jersey. "However, we
still have room to grow before alarm bells start going off."
The Dow Jones industrial average was down 113.25
points, or 0.69 percent, at 16,417.30. The Standard & Poor's 500
Index was down 14.54 points, or 0.77 percent, at
1,870.12. The Nasdaq Composite Index was down 47.20
points, or 1.14 percent, at 4,090.85.
The benchmark 10-year U.S. Treasury note was up
6/32, the yield at 2.5878 percent.
The euro rose 0.4 percent to $1.3930 against the
dollar while the yen rose 0.5 percent to 101.59. European
shares fell 0.3 percent, while the MSCI International ACWI Price
Index slipped 0.2 percent.
Gold dipped 0.1 percent following a sharp rally over
the previous two sessions. Wheat prices - which have been
tied to the situation between Russia and Ukraine, both of which
are big grain producers- rose for a third straight session, up
In Europe, the European Central Bank is expected to repeat
its concern about the strong euro's impact on already-low
inflation when it meets on Thursday. But economists doubt the
ECB will cut record-low interest rates again.
Yields on peripheral countries' lower-rated bonds also
remained at multi-year, and in some cases, all-time, lows.
Investors welcomed Portugal's plan to exit its bailout
and continued to bet on some future easing of
ECB monetary policy.
(Reporting by Ryan Vlastelica; Editing by Dan Grebler)