NEW YORK (Reuters) - Global stocks advanced on Friday, with a broad measure of U.S. equities rising to an almost four-year high after news of subdued inflation added to investment sentiment and helped fuel a retreat in government debt markets.
While the benchmark Standard & Poor's 500 index rose for a fifth straight week, gaining 2.4 percent for its best weekly performance since mid-December, the Dow and Nasdaq fell on Friday in a sign of caution after the run-up in U.S. stocks.
A report on U.S. consumer prices in February eased a hawkish view on interest rates, causing the dollar to fall and helping spur the sell-off in bonds. Improving U.S. economic data had recently sparked speculation that the Federal Reserve would raise rates sooner than its time frame of late 2014.
U.S. stocks mostly held near break-even for most of the session, with the S&P 500 Index staying above the 1,400 level it reached earlier in the week for the first time since May 2008.
The almost 30 percent rally from October lows for the S&P has made investors want to see further gains in corporate earnings, said Rick Meckler, president of hedge fund LibertyView Capital Management LLC, in Jersey City, New Jersey.
"It seems like we're at a key point in time in terms of show-me some results, instead of the anecdotal signs everybody's feeling better," Meckler said. "We're getting more to an equilibrium to sustain the incredible growth of the first quarter."
The Dow Jones industrial average .DJI ended down 20.14 points, or 0.15 percent, at 13,232.62. The Standard & Poor's 500 Index .SPX added 1.57 points, or 0.11 percent, to 1,404.17. The Nasdaq Composite Index .IXIC was down 1.11 points, or 0.04 percent, at 3,055.26.
Global stocks advanced, helped by an unexpected jump in European exports in January and the U.S. economic data.
The U.S. Consumer Price Index rose 0.4 percent after a 0.2 percent advance in January, with gasoline accounting for more than 80 percent of the rise, the Labor Department said.
New car prices were up 0.6 percent, a good sign of demand in the economy, said Michael Strauss, chief economist at Commondfund in Wilton, Connecticut.
"Profit margins are holding up, maybe even doing a little bit better for those products that are in strong demand, and we're seeing some of that unfold in the auto sector," he said. "If you thought the auto sales gain in February was sparked by promotions, this number confirms that was not the case."
Separate data showed factory output edged higher last month, despite a fallback in auto production. However, overall industrial output was flat, held back by a second straight monthly decline in mining activity.
In Europe, a surge in German exports helped the euro zone to cut its trade deficit by more than half to 7.6 billion euros in January from a year earlier, the European Union's statistics office Eurostat reported.
The MSCI world equity index .MIWD00000PUS rose 0.4 percent, while the pan-European FTSE Eurofirst 300 .FTEU3 index rose 0.4 percent to close at 1,106.79.
European stocks climbed for the fourth straight day and hit their highest level since before the market's slump in late July.
"Investors see the glass half full now," said Jean-Marie Mercadal, chief investment officer of OFI Asset Management, which has 47.3 billion euros ($62.3 billion) under management.
"That said, technically, the market is 'overbought' and it's dangerous to chase the rally after such a rise," he said. "I wouldn't be surprised to see 5-10 percent pullbacks in the next few weeks, which will offer entry points that investors should use to significantly increase their exposure to the asset class."
The euro climbed against the dollar. The euro rose 0.7 percent to $1.3173, while the U.S. dollar index .DXY was down 0.5 percent at 79.777.
U.S. Treasuries prices slipped, but after this week's sharp retreat, buying inspired by lower prices and higher yields trimmed the session's steepest losses.
The 30-year bond fell as much as a point, lifting its yield to 3.46 percent before trimming losses to trade down 1/32 at a yield of 3.41 percent. The benchmark 10-year U.S. Treasury note was down 5/32 in price to yield 2.30 percent.
Brent crude rebounded above $125 a barrel as attention returned to restricted Iranian exports and global outages that are trimming spare capacity, following a steep drop in prices the previous day.
Brent oil for May delivery rose $3.21 to settle at $125.81 a barrel. The April contract for U.S. light sweet crude oil rose $1.95 to settle at $107.06 a barrel.
Gold fell, marking its largest weekly decline in three months, after top consumer India said it would double import duties on bullion and upbeat U.S. data this week fed optimism over the global economy, boosting risk appetite.
Spot gold prices fell 99 cents to $1,656.70 per ounce.