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 to multi-month lows. Receding fears that big wins by anti-euro parties in EU 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.
Spot gold fell 0.4 percent to $1,258.00 an ounce, having hit $1,255.66, marked its weakest since early February.
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 20/32 in price to yield 2.4449 percent, the lowest 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 ..., 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> turned slightly higher, rising 0.08 percent to 420.42, less than 2 percent below its lifetime 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 4.53 points, or 0.03 percent, to 16,670.97. The S&P 500 <.SPX> gained 2 points, or 0.1 percent, to 1,913.91 and the Nasdaq Composite <.IXIC> dropped 2.881 points, or 0.07 percent, to 4,234.188.
The dollar rose on softness among other major currencies such as the euro, which fell below $1.36 on gathering expectations of an ECB 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 80.561, up 0.26 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 rise in German unemployment and a deceleration in the euro zone money supply reinforced expectations of further ECB stimulus at next month's meeting.
U.S. crude fell more than $1 a barrel as traders took profit ahead of inventory reports expected to show a build, while Brent edged lower, propped up by tensions in Ukraine and Libya.
Brent
(Reporting by Herbert Lash; Additional reporting by Marc Jones in London; Editing by Leslie Adler and James Dalgleish)
