* Wall St extends declines after Polish foreign minister
* Dollar strengthens on strong U.S. services, factory
* European shares rise after encouraging earnings reports
(Adds close of U.S. markets)
By Chuck Mikolajczak
New York, Aug 5 U.S. stocks and bond yields fell
on Tuesday after a report indicating escalating tensions in
Ukraine sparked fresh concern about the region.
Wall Street stocks extended losses after a Bloomberg report
that cited comments from the Polish foreign minister, Radoslaw
Sikorski, who said Russian units were set to pressure or invade
Each of the 10 major S&P sectors closed in negative
territory, with energy the worst-performing group, down
more than 2 percent. But the S&P 500 managed to pare its
losses enough by the closing bell to hold right at the 1,920
The benchmark index has now declined 3.4 percent from its
most recent record high on July 24.
Bonds reversed course on the Russia-Ukraine report, with
yields on the 10-year note touching a session low
of 2.47 percent. The benchmark 10-year U.S. Treasury was up
2/32, its yield at 2.4853 percent.
"It got to the point where it was just too frothy and you
saw it coming and things needed to cool down," said Stephen
Massocca, managing director at Wedbush Equity Management LLC in
"It was clearly the Russian thing, the Ukrainian thing.
Those are rather bellicose comments from Poland so I can see
where that got people a little scared."
U.S. stocks started the session in negative territory after
weak economic data out of China, where the HSBC/Markit services
PMI fell in July to its lowest since November 2005, suggesting a
recovery in the world's second-largest economy may need further
The dollar hit its highest level against a basket of
currencies since September 2013 and was up 0.2 percent at
81.51 after the Institute for Supply Management said
service-sector growth in the United States hit an
eight-and-a-half-year peak in July on strong growth in new
orders and employment.
U.S. factory orders were also strong in July and data showed
positive revisions to durable goods orders, a sign that the
economy continues to improve. The euro fell to the day's low of
$1.3357 after the U.S. data and was last down 0.4 percent
at $1.3375, while the dollar hit a high of 102.92 against the
yen, before losing steam to pull back 102.54.
The Dow Jones industrial average fell 139.81 points,
or 0.84 percent, to close at 16,429.47, the S&P 500 lost
18.78 points, or 0.97 percent, to 1,920.21 and the Nasdaq
Composite dropped 31.05 points, or 0.71 percent, to
The MSCI All-World Index fell 0.7 percent.
European PMI figures showed the continent's economy was
growing, as expected. But manufacturing remained weak and kept
intact expectations the European Central Bank will ease monetary
policy further, pressuring the euro.
European stocks were able to edge higher as investors
cheered forecast-beating results from German luxury carmaker BMW
and France's third-biggest listed bank, Credit
Agricole, among others.
The pan-European FTSEurofirst 300 index of leading
shares gained 0.3 percent, a small recovery from its nearly 4
percent fall over the past two weeks on concerns over financial
uncertainty about Portugal's Banco Espirito Santo,
which was later bailed out.
In commodities markets, Brent crude slipped below
$105 a barrel, to settle down 80 cents at $104.61, as ample
supplies outweighed Middle East turmoil, while U.S. crude
settled down 91 cents to $97.38.
(Reporting by Chuck Mikolajczak; Additional reporting by Daniel
Bases; Editing by Dan Grebler and Leslie Adler)