NEW YORK Global equity prices slipped for a third straight day on Wednesday on growing nervousness about central bank policy, even as Wall Street clung to slim gains.
The dollar rallied as investors squared positions ahead of Friday's U.S. non-farm payrolls report, data that should help determine the timing of the next Federal Reserve interest rate hike.
MSCI's world stocks index .MIWD00000PUS, which tracks shares in 45 nations, was down 0.41 percent, weighed by a sharp drop in Japanese stocks on surging Japanese government bond yields and a strengthening yen.
"The central banking issue is more of a factor of everybody trying to stimulate their economies, and how much more can you do?," said Scott Fullman, chief strategist at Revere Securities LLC.
The recent string of weaker U.S. data has further pushed back expectations for when the Fed might raise benchmark U.S. interest rates.
UK services sector data on Wednesday showed Britain's economy is shrinking at the fastest pace since 2009, upping the pressure on the Bank of England to cut interest rates at its policy meeting on Thursday.
A recent drop in oil prices and concerns about the strength of European banks are among some of the other factors that have halted the rally in equity prices, Fullman said.
Wall Street treaded water in choppy trade after a sharp rise in oil prices bolstered energy shares. Strong hiring data from the private sector, a precursor to the more comprehensive jobs data on Friday, helping financial stocks.
"I think any kind of strength in the overall economy does help the financials because it increases the prospects of the Fed being able to raise interest rates," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.
Chicago Federal Reserve Bank President Charles Evans on Wednesday offered a lukewarm endorsement of a rate increase later this year.
The Dow Jones industrial average .DJI rose 3.83 points, or 0.02 percent, to 18,317.6, the S&P 500 .SPX gained 1.54 points, or 0.07 percent, to 2,158.57 and the Nasdaq Composite .IXIC added 10.75 points, or 0.21 percent, to 5,148.48.
European shares ended little changed as a rebound by the region's struggling banks and a rally in carmaker Fiat Chrysler (FCHA.MI) helped offset losses among companies that reported poor earnings updates.
Europe's broad FTSEurofirst 300 index .FTEU3 closed up 0.07 percent at 1,322.21.
The dollar index .DXY, which tracks the greenback against six major currencies, was up 0.53 percent to 95.568, recovering from six-week lows hit the previous session.
Oil prices jumped more than 3 percent, with U.S. crude futures returning to above $40 a barrel, after a larger-than-expected U.S. gasoline draw offset a surprise build in crude stockpiles.
Brent crude LCOc1 settled up $1.30, or 3.11 percent, at $43.10 a barrel, while U.S. crude CLc1 settled up $1.32, or 3.34 percent, at $40.83.
In bond markets, U.S. Treasury yields edged higher on fears that overseas yields could rise again, and as foreign investors held off on buying U.S. government debt ahead of Friday's U.S. jobs data.
Benchmark 10-year Treasuries prices US10YT=RR were down 2/32 to yield 1.5420 percent, up from a yield of 1.537 percent late Tuesday.
Spot gold prices XAU= were down 0.46 percent to $1,356.98 an ounce.
(Editing by James Dalgleish and Meredith MAzzilli)
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Updated Date: Aug 04, 2016 01:45 AM