NEW YORK (Reuters) - Wall Street stocks ended little changed on Tuesday after early gains supported by stronger-than-expected U.S. retail sales numbers faded, while oil prices rose on tepid growth data in Europe that underpinned hopes for fresh monetary stimulus.
A rise in U.S. retail sales in July, the first increase in four months, added to uncertainty in the bond market over whether growth has slowed to the point at which the U.S. Federal Reserve is likely to launch a new round of stimulus when it meets next month. Treasury prices fell.
Prices of German government bonds also fell after data showed that France and Germany, the euro zone's two biggest economies, had withstood a contraction in the currency bloc in the second quarter.
The U.S. retail sales data propelled gains in the dollar against the yen and pushed down the price of gold.
Analysts have expected equities would struggle to move higher from current levels on low volume as traders hope for new easing measures from U.S. and European central bankers.
"There was a bit of a late skid into the close. It could simply be some profit-taking. We have had a good rally," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati.
The S&P 500 is within a stone's throw of new four-year highs, leaving investors looking for new catalysts to move the market higher. Traders reckon the latest batch of weak data from Europe would pressure the European Central Bank, the Fed or both to act.
The economy of the 17-nation euro zone contracted by 0.2 percent in the second quarter, although Germany eked out growth of 0.3 percent. But even there, a forward-looking sentiment indicator pointed to poorer performance ahead.
The latest European data kept alive expectations for stimulus, without unnerving investors who are looking for clues on whether the Fed, the European Central Bank or both will help their economies with more bond purchases.
The euro zone data followed worrying Chinese trade figures on Friday and Monday's report showing a slowdown in growth in Japan. Both lent support to the view that central banks will be forced to act as early as next month to boost flagging global growth.
In the United States, the retail sales gains for July, which at 0.8 percent marked the biggest increase since February, followed other data on housing and jobs that have raised hopes that an earlier economic slowdown may prove to be temporary.
The Standard & Poor's 500 index hit its highest level since May 1. The S&P has risen for seven of the last eight sessions, with concerns of risk from Europe's debt crisis still casting a cloud.
"Today's data are supportive of the stock market. That's a healthy development," said David Joy, chief market strategist at Ameriprise Financial in Boston.
The Dow Jones industrial average .DJI closed up 2.71 points, or 0.02 percent, at 13,172.14. The S&P 500 Index .SPX ended down 0.18 point, or 0.01 percent, at 1,403.93. The Nasdaq Composite Index .IXIC finished down 5.54 points, or 0.18 percent, at 3,016.98.
Top European shares .FTEU3 ended up 0.66 percent at 1,101.97 points, after taking their biggest tumble in a week on Monday. The global MSCI index .MIWD00000PUS rose 0.15 percent to 323.01 points.
Oil prices climbed as the weak European economic data was slightly less gloomy than anticipated, and ahead of a U.S. report expected to show a drop in oil stocks.
Brent crude settled 43 cents, or 0.38 percent, higher at $114.03 a barrel after flirting with its highest level since early May, while U.S. crude settled up 70 cents, or 0.75 percent, at $93.43 a barrel. <O/R>
In the bond market, U.S. Treasuries and German Bund prices fell as traders reduced their safe-haven holdings in the wake of the less-dire growth data on German and France.
"I don't expect the Fed will be doing anything for at least a month and the same for the ECB," Ameriprise's Joy said.
German Bund futures were down 77 basis points at 142.41, within striking distance of a one-month low set last week. <GVD/EUR>
Benchmark U.S. 10-year notes were down 18/32 in price at 99-2/32 with the yield at 1.727 percent, up 6 basis points. Earlier, the 10-year yield was close to its 100-day moving average of 1.7443 percent, which is a technical indicator that U.S. yields might head higher.
"As sentiment improved during the past couple of weeks, the demand for bonds as a perceived safe haven has diminished, and the bond market has started to decline," said chief macro strategist Gary Thayer at Wells Fargo Advisors in St. Louis, Missouri.
In the currency market, the July improvement in U.S. retail sales helped boost the dollar against the Japanese yen. It was up 0.55 percent at 78.74 yen.
The euro was down 0.07 percent at $1.2323.
In precious metal trading, gold fell 0.65 percent to its lowest level in over a week. It fell for a second straight day, last trading at $1,598.49 an ounce, with investors staying cautious while they wait to hear more from central banks.
Additional reporting by Angela Moo, Chuck Mikolajczak in New York; Marc Jones, Jan Harvey and Richard Hubbard in London; Editing by Dan Grebler