NEW YORK (Reuters) - The dollar fell to a two-year low against the euro on Thursday, while U.S. stocks were little changed as crude oil prices stayed near $64 a barrel.
U.S. Treasury debt prices were steady, with government bonds little moved by a report showing a higher-than-expected rise in the number of U.S. workers filing first-time claims for jobless benefits last week.
Investor caution ahead of Friday's U.S. jobs report for March, which will be closely watched for hints about the state of the U.S. economy, as well as a winding down of trading in major markets before the holiday weekend, kept trading volumes thin.
Friday's jobs data could shed light on whether the Federal Reserve will lower rates later this year from the current 5.25 percent to support the economy. On Wednesday, a gauge of the U.S. services sector showed anemic growth even as price pressures rose.
"Investors are really on the sidelines here, looking to the employment numbers tomorrow," said Bernd Wuebben, senior bond market strategist at BNP Paribas in New York.
The Dow Jones industrial average .DJI was down 4.47 points, or 0.04 percent, at 12,525.58, while the Standard & Poor's 500 Index .SPX was up 0.60 points, or 0.04 percent, at 1,439.97. The Nasdaq Composite Index .IXIC was up 3.85 points, or 0.16 percent, at 2,462.54.
Investors bought shares of companies likely to best withstand a slowing economy, including Kraft Foods Inc. KFT.N and drug company Johnson & Johnson(JNJ.N). They sold companies whose fortunes are tied closely to economic performance, such as big manufacturers like 3M Co. (MMM.N).
The euro rose as high as $1.344 EUR=. It last changed hands at $1.3428, up 0.4 percent. But sterling fell 0.3 percent against the dollar GBP= to trade at $1.9712 after the Bank of England left rates on hold at 5.25 percent and traders trimmed expectations on how far UK rates will rise in the months ahead. The dollar was little changed against the yen.
Oil held recent gains even though Iran freed British troops held captive, easing political tensions and fears of any near-term supply disruptions from the Middle East. High oil prices raise concern about inflation and a depressing effect on economic growth, analysts said.
"Even though you had the so-called settlement between Iran and Britain, there's still a lot of tension," said Victor Pugliese, director of listed equity trading at First Albany Corp. in San Francisco.
"If you went by consumption right now, signaling that economies are slowing around the world, you'd think crude should be below $55 a barrel. There's still a geopolitical premium to it."
On the New York Mercantile Exchange, May crude CLK7 was down 22 cents, or 0.3 percent, at $64.16 a barrel, trading from $63.85 to $64.94.
U.S. gold futures prices edged higher, driven by a weaker dollar and position squaring. Most-active gold futures for June delivery GCM7 on the COMEX division of the New York Mercantile Exchange were up $2.10 to $679.50, trading between $676.60 and $681.00.
The FTSEurofirst 300 index .FTEU3 of top European shares closed little changed, with investors unwilling to place big bets on the day before U.S. jobs data and before the Easter holidays.
But shares on Britain's FTSE 100 .FTSE closed up 0.51 percent, its highest close in six weeks, after the Bank of England kept interest rates steady. The bank had been widely expected to keep rates on hold, but its last two hikes came as a surprise.
Tokyo's Nikkei .N225 ended down 0.3 percent after two days of strong gains, although MSCI's broadest index of shares elsewhere in Asia .MSCIAPJ rose 0.1 percent.
MNSI's All Country World Index .MSCIWD was up 0.22 percent at 382.20 points -- within one point of its all-time high of 383.12 on February 26, before a wobble in global risk appetite sparked a sharp stocks sell-off.
The benchmark 10-year U.S. Treasury note US10YT=RR was down 2/32, with the yield at 4.6622 percent. The 2-year U.S. Treasury note US2YT=RR was down 1/32, with the yield at 4.6165 percent.