By Herbert Lash
NEW YORK (Reuters) - Global equity markets traded flat on Wednesday as U.S. and German equities eased from record highs, but risk appetite remained strong, knocking safe-haven gold to a 3-1/2-month low.
U.S. and European bond markets rallied, pushing yields down to multi-month lows. Receding fears that big wins by anti-euro parties in EU parliamentary elections might derail fiscal reforms in weaker countries helped European bonds.
The recent rally in equities has been supported by strong U.S. economic data and expectations of monetary easing by the European Central Bank. The benchmark S&P 500 hit yet another intraday record early in the session before retreating.
On Tuesday, gold posted its biggest daily fall since mid-December after U.S. and German stocks set record highs.
The 10-year U.S. Treasury note fell 21/32 in price to yield 2.4431 percent, the lowest yield since last July.
"We made a pretty decisive move above 1,900" on the S&P 500, said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.
"Economic momentum is clearly to the upside at the moment, the surprise index is up and that's pretty powerful for stocks," he said, referring to Citi's Economic Surprise Index, which measures how well data performs relative to forecasts. "We've had a constant stream of better-than-expected data and the bond market has remained supportive."
MSCI's all-country world equity index <.MIWD00000PUS> reversed course to turn slightly higher, rising 0.06 percent to 420.35 points, less than 2 percent below its life-time high.
The FTSEurofirst 300 index <.FTEU3> of leading European shares fell 0.07 percent to close at 1,377.83.
Wall Street traded mixed as the S&P rebounded a tad.
The Dow Jones industrial average <.DJI> fell 14.75 points, or 0.09 percent, to 16,660.75; the S&P 500 <.SPX> gained 1.21 points, or 0.06 percent, to 1,913.12; and the Nasdaq Composite <.IXIC> dropped 1.527 points, or 0.04 percent, to 4,235.542.
The dollar rose on softness among other major currencies such as the euro, which fell below $1.36 on gathering expectations of an ECB monetary policy shift next week.
The U.S. dollar index <.DXY> hit an eight-week peak of 80.581, reflecting a 0.29 percent decline for the trading day in the euro against the U.S. currency. The index, a measure of a basket of currencies, was last at 80.567 in New York trade, up 0.27 percent.
A rally in German Bunds spilled over to U.S. Treasuries. German 10-year Bund yields, the benchmark for euro zone borrowing, were down at 1.287 percent, a 2014 low.
Yields fell after an unexpected increase in German unemployment and a deceleration in the euro zone money supply. The data reinforced expectations that the ECB will introduce further stimulus at next month's meeting.
Crude oil prices slid for a second straight day as the stronger dollar and lower demand outweighed tensions in Ukraine and Libya and positive economic data in the United States.
Brent
(Reporting by Herbert Lash; Additional reporting by Marc Jones in London; Editing by Leslie Adler)
