GLOBAL MARKETS-Equities fall, bond yields rise on Draghi remarks, mixed earnings

* Mixed corporate earnings drag S&P 500, Nasdaq away from
highs
* ECB's Draghi sounds upbeat economic tone, leaves rates
unchanged
* Government debt yields inch higher ahead of Fed meeting
* Crude gains amid U.S. stockpile drop, Middle East tensions

(Updates to U.S. market close)
By Stephen Culp
NEW YORK, July 25 (Reuters) - U.S. stocks backed off record
highs and government bond yields ticked up on Thursday following
mixed earnings reports and rosier-than-expected economic
sentiment from the European Central Bank.
The ECB signaled its intention to explore monetary easing
but left interest rates unchanged, and bank President Mario
Draghi struck a more upbeat tone on the economy than investors
expected, sending U.S. and European equities lower and boosting
sovereign debt yields. "Although he said things such as the outlook is getting
worse and worse, they still see the sign of a recession risk as
pretty low, so the market is interpreting this as somewhat
hawkish," said Jon Hill, an interest rate strategist at BMO
Capital Markets in New York.
A mixed bag of earnings reports from a swath of U.S.
companies pulled Wall Street lower a day after the S&P 500 and
the Nasdaq hit all-time highs, painting a picture of profit
beats amid underwhelming guidance.
"The market's headed into the bulk of the earnings season
near record highs and mixed reports have led the markets to the
downside," said Joseph Sroka, chief investment officer at
NovaPoint in Atlanta. "We're seeing the expected toll that trade
and tariffs are taking on the companies."
The protracted U.S.-China trade war and a softening global
economy should encourage the U.S. Federal Reserve to cut
interest rates next Wednesday for the first time in a decade.
But investors will be eyeing the Fed's statement at the
conclusion of its two-day monetary policy meeting for clues as
to what to expect going forward.
"The market is expecting more than a single cut (this year)
and if the Fed implies that that's not a slam dunk it's going to
have implications for the market," said Chuck Carlson, chief
executive officer at Horizon Investment Services in Hammond,
Indiana.
The Dow Jones Industrial Average .DJI fell 128.65 points,
or 0.47%, to 27,141.32, the S&P 500 .SPX lost 15.83 points, or
0.52%, to 3,003.73 and the Nasdaq Composite .IXIC dropped
82.96 points, or 1%, to 8,238.54.
European stocks reversed their initial gains in reaction to
the ECB's easing intentions after Draghi said the risk of a
recession in the euro zone was "pretty low" and the central bank
would wait for more data before "taking action." The pan-European STOXX 600 index .STOXX declined 0.56% and
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.51%.
U.S. Treasury yields rose following Draghi's remarks.
Benchmark 10-year notes US10YT=RR fell 8/32 in price to
yield 2.0758%, compared with 2.05% late on Wednesday.
The 30-year bond US30YT=RR fell 20/32 in price to yield
2.6061%, compared with 2.578% late on Wednesday.
The dollar index, which measures the greenback against a
basket of other world currencies, inched higher, while the euro
gave up earlier gains to show a nominal increase from
Wednesday's two-month low.
The dollar index .DXY rose 0.09%, with the euro EUR= up
0.04% to $1.1144.
The Japanese yen weakened 0.48% versus the greenback at
108.72 per dollar, while sterling GBP= was last trading at
$1.2451, down 0.24% on the day.
Oil prices climbed as Middle East tensions and a substantial
drop in U.S. crude stocks raised supply concerns. U.S. crude oil futures CLc1 settled at $56.02 per barrel,
a 0.25% gain, while Brent crude oil futures LCOc1 settled up
0.33% at $63.39 per barrel. Spot gold XAU= dropped 0.8% to $1,414.27 an ounce.
Copper CMCU3 fell 0.23% to $5,985.50 a tonne.
Three-month aluminum on the London Metal Exchange CMAL3
rose 0.03% to $1,826.50 a tonne.

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