(Adds U.S. market open, byline; changes dateline; previous
LONDON)
* World stock markets trade little changed after sell-off
* Oil off highs despite threat of Iran strike against U.S.
* Safe-haven currencies retreat as U.S.-Iran fears ease
By Herbert Lash
NEW YORK, Jan 7 (Reuters) - The dollar gained, helped by
better-than-expected data in the U.S. non-manufacturing sector,
and oil prices retreated on Tuesday as investors awaited
developments in the U.S.-Iranian stand-off in the Middle East.
Gold prices inched higher after earlier backing off an
almost seven-year high on Monday, when risk-adverse investors
drove demand, while stocks in Europe and on Wall Street were
little changed.
A U.S. drone strike in Baghdad on Friday killed Iranian
military commander Qassem Soleimani, widely seen as Iran's
second-most powerful figure. Tehran threatened
retaliation. MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.01%, while the pan-European STOXX 600 index .STOXX rose
0.29%.
"Earnings and the economy have taken a bit of a back seat
relative to the rising tensions in the Mideast and investors are
keenly focused on what might happen there next," said Michael
Arone, chief investment strategist at State Street Global
Advisors in Boston.
Even amid rising geopolitical tensions, cyclical stocks have
outperformed defensive shares, an indication the U.S. economy
remains strong and growth will reaccelerate later in the year
despite the flare-up in the Middle East, he said.
"The ISM non-manufacturing number was a little bit above
expectations. That would support the idea the consumer and
cyclicals that benefit from the consumer are the leadership
today even in a down market," Arone said.
The Institute for Supply Management said its
non-manufacturing activity index rose to 55.0 last month from
53.9 in November. A reading above 50 indicates expansion in the
services sector, which accounts for more than two-thirds of U.S.
economic activity. On Wall Street, the Dow Jones Industrial Average .DJI fell
108.84 points, or 0.38%, to 28,594.54 The S&P 500 .SPX lost
8.37 points, or 0.26%, to 3,237.91 and the Nasdaq Composite
.IXIC added 5.70 points, or 0.06%, to 9,077.16.
Emerging market stocks rose 0.29%.
The safe-haven Japanese yen fell from a three-month high
versus the dollar and the Swiss franc pulled back from recent
highs against the greenback, though concerns remained paramount
about U.S.-Iranian relations.
The dollar index .DXY rose 0.4%, with the euro EUR= down
0.5% to $1.1137. The yen JPY= weakened 0.13% versus the
greenback at 108.53 per dollar.
The dollar was up 0.39% at 0.9718 franc CHF= .
Oil prices fell more than 1%, surrendering some of the gains
of recent days as investors reconsidered the likelihood of
immediate supply disruptions in the Middle East.
Brent crude LCOc1 was down $1.21 at $67.70 a barrel. U.S.
West Texas Intermediate crude CLc1 fell 83 cents to $62.44 a
barrel.
Euro zone government bond yields edged up from three-week
lows and yields on U.S. Treasuries were little changed.
Germany's benchmark Bund yield DE10YT=RR was little
changed at around -0.28%, having risen from more than three-week
lows on Monday at -0.31%. But it remained below last week's
seven-month highs amid euphoria over the year-end stock rally.
Benchmark 10-year notes US10YT=RR rose 1/32 in price to
yield 1.8073%.
Spot gold XAU= edged up 0.31% at $1,570.7 an ounce.
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