By Marc Jones
LONDON (Reuters) - Global equity markets wavered and German bond yields edged up from record lows on Friday after euro zone inflation was seen as still not dire enough to drive the European Central Bank to ease monetary policy next week, as many investors have anticipated.
Euro zone inflation dropped to a fresh five-year low, but it was not seen as low enough to force the ECB to enact monetary stimulus, putting a damper on European shares that nonetheless were expected to finish August in positive territory.
Stocks on Wall Street straddled either side of breakeven, and MSCI's gauge of worldwide stock performance <.MIWD00000PUS> was slightly lower, down 0.03 percent.
European bond yields fell sharply across the euro zone at the start of the week after ECB President Mario Draghi highlighted a significant drop in inflation expectations in a speech at a meeting of central bankers in Jackson Hole, Wyoming.
Draghi's comments raised expectations that the ECB would soon deploy a large-scale purchase of assets known as quantitative easing, or QE. That view helped weaken the euro and boosted enthusiasm for stocks on both sides of the Atlantic.
"What people realize is that for the ECB to engage in public-sector QE ... the ECB has to see the whites of the eyes of deflation," said Wouter Sturkenboom, investment strategist at Russell Investments.
German 10-year Bund yields
The benchmark 10-year U.S. Treasury
The Dow Jones industrial average <.DJI> fell 12.54 points, or 0.07 percent, to 17,067.03. The S&P 500 <.SPX> rose 2.48 points, or 0.12 percent, to 1,999.22 and the Nasdaq Composite <.IXIC> added 13.98 points, or 0.31 percent, to 4,571.68.
The FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.05 percent at 1,369.99 points.
The euro was last trading off a touch at $1.3161
(Reporting by Marc Jones, editing by John Stonestreet and Toby Chopra)
