By Caroline Valetkevitch
NEW YORK (Reuters) – Treasury yields dropped and the dollar eased on Friday following a stabilization in European government bonds and another batch of weak U.S. data that raised expectations the Federal Reserve will need to wait longer to hike interest rates.
U.S. stocks finished near flat, though the S&P 500 eked out another record closing high and major indexes posted gains for the week. The MSCI World equity index gained 0.26 percent and was up for the week as well.
Data showed U.S. industrial production fell for a fifth straight month in April, in part as oil and gas drilling declined further.
A separate report showing a sharp drop in U.S. consumer confidence in early May also underscored a lackluster economic picture for the United States.
The data follows weak retail sales and producer inflation data this week, suggesting the Fed will probably not raise interest rates anytime soon.
“The market is getting more concerned that the economy weakened through the first quarter into the second quarter, and that pushes the Fed back further and further and people get more comfortable jumping back into Treasuries here,” said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York.
European government bonds stabilized, helping market sentiment.
Treasury yields have jumped in the past three weeks, in line with a dramatic sell-off in German government debt, and some investors are taking advantage of the higher yields.
Benchmark 10-year Treasury notes were last up 25/32 in price to yield 2.15 percent, down from 2.24 percent late on Thursday.
The dollar index, a measure of the greenback against major currencies, was down 0.2 percent and fell for a fifth straight week, the longest stretch of declines in four years.
The dollar also fell to a three-month low against the euro. In late U.S. trading, the euro rose 0.4 percent to $1.1455, after earlier hitting a three-month peak of $1.1466.
On Wall Street, the Dow Jones industrial average rose 20.32 points, or 0.11 percent, to end at 18,272.56, the S&P 500 gained 1.63 points, or 0.08 percent, to 2,122.73 and the Nasdaq Composite dropped 2.50 points, or 0.05 percent, to 5,048.29.
The pan-European FTSEurofirst 300 index closed down 0.5 percent, with export-focused German stocks among the hardest hit as the euro gained against the dollar.
In commodities trading, U.S. oil futures ended lower as investors questioned the recent rally, while gold held near three-month highs as the dollar eased.
U.S. crude settled down 19 cents at $59.69 a barrel, after falling more than $1 during the session. Brent settled up 11 cents at $66.81 a barrel.
(Additional reporting by Karen Brettell and Richard Leong in New York and Lionel Laurent in London; Editing by Larry King, Meredith Mazzilli and Dan Grebler)