* U.S. stocks end flat in late bout of buying
* Euro rises to two-month-high on euro-zone optimism
* Sterling slips after Britain's GDP shrank unexpectedly
* Commodity prices fall on fears of Asian economic tightening
(Updates with U.S. markets' close, Nikkei stock futures)
By Manuela Badawy
NEW YORK, Jan 25 (Reuters) - U.S. stocks ended flat on
Tuesday, overcoming most of the session's losses as bargain
hunters bought equities late in the day, while the euro rose to
touch a fresh-two-month high against the dollar.
The euro's rally was driven by increased optimism that
Europe will be able to manage its debt crisis.
World stocks were pressured throughout the day after data
showed Britain's economy unexpectedly contracted at the end of
2010, while fears of inflation in Asia hit commodity prices.
But on Wall Street, sentiment improved late in the day.
"There is more of a break trade, sort of a two steps up,
one step back type trade in U.S. equity markets," said John
Brady, MF Global's senior vice president for U.S. and global
interest-rate products.
The blue-chip Dow Jones industrial average <> inched
lower for the day after earlier touching an intraday high that
was less than 15 points from the psychologically important
12,000 level. On Monday, the Dow also made a run toward 12,000
and then backed away.
The front-month futures contract for the Nikkei 225 stock
index <0#NK:> trading in Chicago rose 30 points to 10,440.
U.S. crude oil futures <CLc1> fell $1.68, or nearly 2
percent, to settle at $86.19 a barrel, copper hit one-month
lows and gold fell to its lowest in three months after India
raised interest rates, saying inflation may stay high for
longer than expected. []
India's rate increase rattled investors already concerned
by China's recent move to raise banks' required reserves and
its two rate hikes since the start of 2010.
"There is increasing concern about rising interest rates in
Asia," said Stephen Briggs, commodities analyst at BNP Paribas
in London. "It's raising fear that liquidity in the global
markets will continue to shrink."
U.S. government bonds rose on a report that President
Barack Obama would propose a freeze on discretionary
non-security spending in his State of the Union address, which
will be broadcast live on television on Tuesday night.
An index of pan-European shares <> ended down 0.6
percent after data showed a 0.5 percent decline in UK gross
domestic product in the fourth quarter as Britain's government
embarks on deep spending cuts. For details, see
[] An index of world stocks <.MIWD00000PUS> was
down 0.09 percent.
LATE SHIFT ON WALL ST
U.S. stocks reversed losses in a late flurry of buying and
ended little changed as optimism about overall earnings offset
disappointment in results from blue chips 3M and Johnson &
Johnson.
The Dow Jones industrial average <> dipped 3.33 points,
or 0.03 percent, to end at 11,977.19. But the Standard & Poor's
500 Index <.SPX> rose 0.34 of a point, or 0.03 percent, to
finish at 1,291.18. The Nasdaq Composite Index <> gained
1.70 points, or 0.06 percent, to close at 2,719.25.
The Conference Board, a U.S. industry group, said its index
of consumer confidence jumped in January to the highest since
May 2010. []
The euro rose to a fresh two-month high above $1.37,
extending a six-day run of gains against the dollar as
investors hoped that European authorities will do enough to
contain the debt crisis in the months ahead.
The euro rose to $1.3705 <EUR=EBS>, its best level on the
day and its highest since late November, before easing to
$1.3695, up 0.4 percent.
The euro's volatility throughout the day was partly due to
the 440-billion-euro fund, the European Financial Stability
Facility's (EFSF) inaugural debt issue.
Speculation that the new issue would be massively
oversubscribed boosted the euro in early trade, but those gains
were eroded when investors who built up euros to buy EFSF debt
sold them back.
The dollar index <.DXY>, which measures the dollar's
performance against a basket of major currencies, slipped 0.19
percent. Sterling <GBP=> slid 1.01 percent to $1.5833 late in
the New York day.
Against the Japanese yen, the dollar <JPY=> was down 0.35
percent at 82.18 after U.S. bond yields extended losses
following solid demand for the sale of $35 billion of two-year
notes. Lower yields make dollar-denominated assets less
attractive.
The benchmark 10-year U.S. Treasury note <US10YT=RR>
climbed 19/32, with the yield at 3.3303 percent. The 2-year
U.S. Treasury note <US2YT=RR> was up 2/32, with the yield at
0.584 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
up 35/32 -- slightly more than a full point -- with the yield
at 4.491 percent.
The Reuters/Jefferies CRB Index <.CRB>, a global benchmark
for commodities, was down 1.54 percent on worries about
economic tightening in Asia.
Spot gold prices <XAU=> fell $2.15, or 0.16 percent, to
$1,332.10 an ounce. Copper <CMCU3>, which is used in power and
construction, hit a one-month low -- falling 2.77 percent to
$9,265 a tonne, while tin hit a record high on supply
concerns.
(Reporting by Manuela Badawy; Additional reporting by Angela
Moon, Wanfeng Zhou, Barani Krishnan and Ellen Freilich; Editing
by Jan Paschal)
