By Herbert Lash
NEW YORK (Reuters) - More downbeat data from Europe left global equity markets on course for a third day of losses on Tuesday, while U.S. air strikes in Syria set a cautionary tone and helped lift prices of safe-haven bonds.
President Barack Obama vowed to continue the fight against Islamic State fighters following the first U.S.-led air strikes targeting the militant group in Syria. The strikes drove safe-haven bids on concerns that the conflict could intensify.
"We're starting to see a little bit of safe-haven buying come back into the market," said David Coard, head of fixed income sales and trading at Williams Capital Group in New York.
The benchmark 10-year Treasury bond
German 10-year Bund yields
Stocks on Wall Street eased, following downward pressure in Europe after data showed euro zone business activity expanded at a slightly weaker pace in September than expected. Firms cut prices for a 30th consecutive month to boost sales.
Shares of a dozen companies on both sides of the Atlantic fell, wiping out a total of $13 billion of stock market value, after the U.S. Treasury took steps to curb "inversion" deals aimed at escaping high U.S. taxes by reincorporating abroad.
The manufacturing PMI for Germany slumped to its lowest since June 2013, below forecasts in a Reuters poll. A services industry PMI for the bloc's No. 2 economy, France, faltered after just two months in growth territory.
Markets shrugged off data showing U.S. manufacturing activity held near a 4-1/2 year high this month.
MSCI's all-country world index <.MIWD00000PUS> fell 0.54 percent to 422.28, while the FTSEurofirst 300 index <.FTEU3> of top European shares closed down 1.34 percent at 1,374.85.
The Dow Jones industrial average <.DJI> fell 80.88 points, or 0.47 percent, at 17,091.80. The Standard & Poor's 500 Index <.SPX> was down 7.66 points, or 0.38 percent, at 1,986.63. The Nasdaq Composite Index <.IXIC> was down 11.24 points, or 0.25 percent, at 4,516.45.
Despite a downbeat tone in markets, the prospect that stocks continue to rally appears the likely course, said Andrew Wilkinson, chief market analyst at Interactive Brokers Group in Greenwich, Connecticut.
"The underpinnings of the global stock market rally remain intact, so there's not a lot of catalyst for change," Wilkinson said. He cited the Federal Reserve's low interest rate pledge last week, rising albeit tepid global growth and earnings that justify current market valuations.
The dollar rebounded against both the euro and Japanese yen. The euro
The dollar index <.DXY> slipped 0.03 percent at 84.723.
Brent crude oil fell toward a two-year low near $96 a barrel, reversing early gains as higher output from Libya and Iraq overshadowed the start of U.S.-led air strikes in Syria.
Brent for November delivery
(Reporting by Herbert Lash; Additional reporting by Marc Jones in London; Editing by Dan Grebler)
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