GLOBAL MARKETS-US stocks mixed, Treasuries edge up, dollar falls

Tue Jan 29, 2013 3:55pm GMT

* Markets await Fed meeting, data on U.S. and China

* Brent oil holds above $113 a barrel

* US consumer confidence data dents enthusiasm

NEW YORK, Jan 29 (Reuters) - U.S. stocks were mixed, U.S. Treasury prices edged up and the dollar fell to a 14-month low against euro on Tuesday, with investors cautious about a two-day Federal Reserve policy meeting.

Investors were also reluctant to make big bets on some mixed U.S. economic data, given the run-up in stocks in recent weeks and risk in the form of a slew of economic reports throughout the week and the Fed meeting, which ends on Wednesday.

U.S. consumer confidence dropped in January to its lowest in more than a year as Americans were more pessimistic about the economic outlook and their financial prospects, according to a private sector report released on Tuesday.

That followed a report that showed U.S. single-family home prices rose in November, building on a string of gains that point to a housing market that is on the mend..

"There is a serious split between the attitudes of consumers and the attitudes of the markets," said Joseph Trevisani, chief market strategist at WorldWideMarkets, in Woodcliff Lake, New Jersey, after the consumer confidence data. "This may make for a weaker dollar as it makes it less likely the Fed will contemplate an early removal of QE," referring to the central bank's debt-buying program.

The euro extended gains versus the dollar, breaking above key resistance to hit a 14-month high. It last traded at $1.3492.

In the U.S. Treasury debt market, benchmark 10-year yields proved unable to hold above the key 2 percent level touched on Monday, with investors looking ahead to a debt auction later in the day as well as the Fed meeting.

The 10-year U.S. Treasury note was up 1/32, the yield at 1.9614 percent.

Debt prices reversed early losses to advance after the consumer confidence data.

"This is a reflection of the increase of the payroll tax with the tax holiday going away," said Craig Dismuke, chief economic strategist with Vining Sparks in Memphis, Tennessee.

"This is a big concern. This could cut 0.5 percentage point off first-quarter GDP," he added.

STOCKS EDGE HIGHER

The Dow Jones industrial average was up 37.01 points, or 0.27 percent, at 13,918.94. The Standard & Poor's 500 Index was up 1.98 points, or 0.13 percent, at 1,502.16. The Nasdaq Composite Index was down 10.92 points, or 0.35 percent, at 3,143.38.

"We need to slow down and digest the huge move we've had," said Christian Wagner, chief executive officer at Longview Capital Management in Wilmington, Delaware.

Recent gains in stocks have largely come on a strong start to the corporate earnings season, and that trend continued on Tuesday with positive results from both Ford Motor Co and Pfizer Inc.

European equities steadied near two-year highs, with weaker banking and technology shares offsetting positive sentiment after a strong start to the earnings season and a brightening economic outlook.

The benchmark FTSEurofirst 300 index was up 0.25 percent. The index is up nearly 24 percent from its June lows, but may not move substantially higher in the coming days.

Gains across Asian markets, led by a big rally in Australian shares, helped to lift MSCI's world equity index 0.34 percent to near a 20-month high.

Peter Sullivan, head of European Equity Strategy at HSBC in London, said the past 9 weeks have seen steady equity inflows from retail investors after four years dominated by outflows.

Sullivan said these new equity flows were going primarily into emerging markets and Europe but they did not yet represent a full switch from bonds to equities. "Bond flows remain positive, they are just at a reduced level," he said.

FED AWAITED

Investors now await the outcome of the two-day Federal Reserve policy meeting. The Fed is not expected to change its stance after deciding only in December to loosen conditions further. However, investors are watching to see if changes in the membership of the policy-setting committee for 2013 could signal a shift in the future.

Gold snapped a four-day losing streak to rise 0.3 percent to around $1,660.90 an ounce, but any hint that the Fed is considering an end to its loose monetary policy would probably send the precious metal down.

Brent crude and U.S. oil prices were mixed, but movements were limited, with Brent crude up 39 cents to $113.87 a barrel and U.S. crude rising $1.04 to $97.48.

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