By Herbert Lash
NEW YORK, Nov 1 (Reuters) - Most global equity markets
slipped on Friday despite upbeat factory data worldwide, while
the euro fell to a two-week low against the dollar on growing
expectations the European Central Bank will ease monetary policy
further to encourage growth.
Stocks on Wall Street rose in a see-saw session as
surprisingly strong manufacturing data overshadowed views the
Federal Reserve could reduce stimulus earlier than expected.
U.S. equities have been pressured since a Fed statement on
Wednesday raised concerns about when the central bank would
begin to scale back its stimulus program, which has fueled the
benchmark S&P 500 index's 23-percent rally this year.
Despite concerns Wall Street might be getting frothy, funds
that hold U.S. stocks attracted $7.6 billion in the week ended
Oct. 30, a Bank of America Merrill Lynch Global Research report
showed, citing data from fund-tracker EPFR Global.
The Institute for Supply Management (ISM) said its index of
U.S. factory activity rose to 56.4 last month - its best showing
since April 2011 - from 56.2 in September. Economists polled by
Reuters had expected a reading of 55.
The S&P and Dow Jones industrial average have repeatedly hit
record highs this year, including earlier this week, but the
strong gains have triggered worries about how much further the
rally can continue.
With almost three-fourths of S&P 500 companies reporting
results so far, 68.5 percent have beaten profit expectations,
above the long-term average of 63 percent, according to Thomson
Reuters data. However, only 53.3 percent have topped revenue
forecasts, below the 61 percent average since 2002.
'I'm not comfortable with the market at all-time highs,
especially with earnings being mediocre,' said Mark Grant,
managing director at Southwest Securities in Fort Lauderdale,
'But the manufacturing report was better than expected, and
where else can you go with the Fed putting so much liquidity
into the system?' Grant said.
So far this year $109.7 billion has flowed into U.S. stock
funds, on pace to surpass annual investment flows in the past
decade, according to Bank of America Merrill Lynch.
The Dow Jones industrial average closed up 69.80
points, or 0.45 percent, at 15,615.55. The Standard & Poor's 500
Index rose 5.10 points, or 0.29 percent, at 1,761.64. The
Nasdaq Composite Index gained 2.34 points, or 0.06
percent, at 3,922.04.
For the week, the Dow gained 0.3 percent, the S&P added 0.1
percent, while the Nasdaq fell 0.5 percent.
European stock markets eased off five-year highs amid
weakness in regional corporate earnings. The pan-European
FTSEurofirst 300 index of leading European companies
fell 0.31 percent to close at 1,289.52.
U.S. Treasuries prices fell for a third consecutive session
as the encouraging ISM manufacturing report suggested the U.S.
economy overcame a drag from the partial government shutdown in
The rosier data revived some worries among investors that
the Fed might scale back its bond-buying earlier than expected -
at its December meeting - rather than early in 2014.
'There is a feeling that they might taper in December. It
has gained a little steam, but that's not the consensus,' said
Matt Duch, a portfolio manager at Calvert Investments in
The benchmark 10-year U.S. Treasury note was
down 23/32 in price to yield 2.6255 percent.
Euro zone bonds broadly edged higher, extending this week's
rise, after data showed a surprisingly sharp inflation slowdown
in the euro zone. Many in the market expect the ECB to signal a
rate cut or new liquidity injections at its meeting next week.
German two-year yields, the most sensitive to
shifts in monetary policy expectations, were 1 basis point lower
at 0.11 percent.
Bund futures fell 15 ticks to settle at 141.85,
having hit a two-month peak of 142.32 on Thursday.
Gold fell about 1 percent, posting its biggest weekly loss
in seven weeks, as the strong factory data renewed anxiety that
the Fed one day will scale back its bond-buying.
U.S. Comex gold futures for December settled down
$10.50 to $1,313.20 an ounce.
'Overall, investors have expected a reduction in monetary
easing. So, even though there have been no changes effective
this year, the market is selling off in anticipation of Fed
tapering eventually,' said Erica Rannestad, precious metals
analyst at the CPM Group.
Expectations for an ECB rate cut were seen eroding the
euro's interest rate advantage over other major currencies. The
single currency was poised to notch its worst weekly loss
against the dollar since July 2012.
The euro fell 0.68 percent to $1.3489.
Renewed pressure on the euro saw the dollar index rise to a
six-week high of 80.785, climbing further from a
nine-month trough of 78.998 plumbed a week earlier. It last
traded at 80.724.
The dollar was up 0.42 percent against the yen at 98.76 yen, according to Reuters data.
Oil prices fell broadly, heading for a large weekly
percentage decline, as a strong dollar and ample supplies
outweighed concerns about a drop in Libyan crude exports.
Brent crude for December delivery fell $2.93 to
settle down at $105.91 after rising as high as $109.41 a barrel
in early trading.
U.S. oil for December delivery settled down $1.77 at
$94.61, putting it in line for a fourth straight week of
declines, its longest losing streak since June 2012.
(Reporting by Herbert Lash; Editing by Bernadette Baum and Nick
Keywords: MARKETS GLOBAL/
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