* Dollar strengthens on strong U.S. services, factory
* European shares rise after encouraging earnings reports
* Asia hit by unexpected weakness in China services PMI
* Wall Street pares declines after data
(Adds U.S. market open, quote; changes dateline; previous
By Chuck Mikolajczak
New York, Aug 5 The U.S. dollar strengthened and
bond yields rose on Tuesday after strong data on factory orders
and service-sector growth, while European shares gained modestly
after earnings reports.
Wall Street was modestly weaker, as investors reacted
negatively to earnings from Cablevision and a warning on
weak sales from Target Corp.
The dollar hit its highest level since September 2013
against a basket of currencies after the Institute for
Supply Management said service-sector growth in the United
States hit an eight-and-a-half-year peak on strong growth in new
orders and employment.
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 a day's low of
$1.3357 after the U.S. data, while the dollar rose
against the yen to 102.86, continuing a trend of strength in the
"Generally, the dollar started off on a stronger footing
this morning and certainly the strengthening of the data has
helped that rally," said Brian Daingerfield, currency strategist
at the Royal Bank of Scotland in Stamford, Connecticut.
U.S. 10-year yields hit a session high of 2.53
after the manufacturing and services data. The benchmark 10-year
U.S. Treasury note was down 7/32, the yield at 2.5143 percent.
The U.S. data was offset somewhat by weak figures out of
China, where the HSBC/Markit services PMI fell to 50.0 in July,
the lowest since November 2005, from a 15-month high of 53.1 in
June. It suggests a recovery in the world's second-largest
economy may need further government support.
The Dow Jones industrial average fell 55.47 points,
or 0.33 percent, at 16,513.81. The Standard & Poor's 500 Index
was down 6.35 points, or 0.33 percent, at 1,932.64. The
Nasdaq Composite Index was down 6.63 points, or 0.15
percent, at 4,377.26.
Shares of Cablevision fell 5 percent after the company said
subscriber losses doubled in the second quarter, while Target
was down 2.8 percent after saying U.S. and Canadian sales have
The MSCI All-World Index fell 0.4 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 and pressured the euro.
Investors in Europe were cheered by 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 was up 0.4 percent, a small recovery from its near 4
percent fall over the past two weeks on concerns over financial
uncertainty for Portugal's Banco Espirito Santo, which
was later bailed out.
In commodities markets, Brent crude slipped below
$105 a barrel, falling $1.12 to $104.29 as ample supplies
outweighed Middle East turmoil, while U.S. crude shed 85 cents
(Reporting by Chuck Mikolajczak; Additional reporting by Daniel
Bases; Editing by Dan Grebler)