* Disappointing U.S., euro zone data fuel hopes of stimulus
* U.S., German bond yields rise on weak regional data
* Dollar rises against most currencies except yen
* Oil, gold stuck in losing streaks due to stronger
greenback
By Richard Leong
NEW YORK, May 15 (Reuters) - A batch of disappointing
economic reports knocked U.S. stock prices from their record
highs on Wednesday, while evidence that Europe was stuck in
recession pushed the euro to a six-week low against the dollar.
The weak figures on U.S. business activity and data showing
the euro zone economy contracted for a sixth consecutive quarter
in January-to-March, however, pared bets the U.S. Federal
Reserve will reduce its bond purchases any time soon and
bolstered the chance the European Central Bank might cut
interest rates again later this year, analysts said.
This view the Fed and ECB will continue to support their
economies with low interest rates and floods of cash mitigated
the losses in U.S. stocks prices and helped lift European shares
to fresh multi-year highs. It also revived safe-haven bids for
U.S. Treasuries and German Bunds.
"The market is driven by one thing: the massive liquidity
injected by central banks. With bond yields at such levels,
equities seem to be the only interesting asset class," said
Thierry Jabes, strategist at 360 Asset Managers in Paris, which
manages 180 million euros ($232 million).
The bleak news on the euro zone economy spurred worries
about falling energy demand and pushed Brent futures in London
below $102 a barrel.
As the euro weakened, the dollar receded from its 4-1/2-year
high against the yen but held firm against other major
currencies. The dollar index touched its highest level
since July.
The strengthening dollar further reduced investor holdings
in gold whose prices fell for a fifth straight session to a
three-week low.
In morning trading, the Dow Jones (DJI: ^DJI - news) industrial average
was down 5.08 points, or 0.03 percent, at 15,210.17. The
Standard & Poor's 500 Index was down 0.59 points, or 0.04
percent, at 1,649.75. The Nasdaq Composite Index was up
1.08 points, or 0.03 percent, at 3,463.69.
The Dow and S&P 500 reached record highs on Tuesday. Despite
their modest dips, both indices were still up about 16 percent
on the year so far.
Europe's broad FTSEurofirst 300 index of top
company shares was up 0.65 percent at 1,244.71 points, a level
not seen since mid-2008.
Gains in European and Japanese shares kept the MSCI (NYSE: MSCI - news) global
index in the black. It was last up 0.04 percent
on the day at 376.43, the highest since June 2008.
In the bond market, the yield on benchmark U.S. 10-year
Treasury notes fell nearly 5 basis points to 1.935
percent after touching the highest level in seven weeks on
Thursday. German Bund futures were up 13 basis points
at 144.86.
At the end of the sovereign debt spectrum, 10-year Greek
bond prices surged after Fitch Ratings upgraded the
country's junk credit ratings, saying reforms have reduced
Greece's risk of a euro zone exit.
Much attention was also on Italy getting ready to launch a
new 30-year bond to follow the successful 10-year debt sale by
Spain on Tuesday. Italy, euro zone's third-biggest economy,
received over 10 billion euros ($13 billion) of orders for the
new bond.
While investor appetite for the debt of these struggling
euro zone members was encouraging, the 17-member block has
remained in a collective doldrums which has been a drag on its
two biggest members - Germany and France.
The euro was down almost 0.4 percent at $1.2869 and
off 0.7 percent against yen at 131.35 yen.
On the other hand, the dollar steamed ahead against most
other major currencies with the exception of the yen. The dollar
index rose 0.3 percent to 83.861 even though the greenback
slipped 0.2 percent against the Japanese currency.
The strengthening dollar continued to hurt commodities
prices, as it has made dollar-denominated commodities such as
oil more expensive for holders of other currencies.
In London, benchmark Brent crude fell 91 cents to $101.69 a
barrel, while U.S. oil futures lost $1.69 to $92.52
, declining for a fifth straight session and matching a
similar losing streak in December.
Gold was trading around three-week lows at $1,404.94 an
ounce and stretching its losses into a fifth session.
