Shares flat but S&P hits new high; bonds rally on ECB hopes

Wed May 28, 2014 4:58pm EDT
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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 nearly a 4-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 rose 21/32 in price to yield 2.4431 percent, the lowest since last July.

"This is a split personality market with the S&P at or near all time highs in anticipation of an improving economy and higher earnings while the bond market and yields continue to drop suggesting maybe caution is warranted," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

MSCI's all-country world equity index .MIWD00000PUS traded ever so slightly lower, falling 0.02 percent to 420.02, less than 2 percent below its lifetime high.   Continued...

Traders work on the floor of the New York Stock Exchange May 23, 2014. REUTERS/Brendan McDermid