* Surprising U.S. sentiment drop dulls upbeat retail sales
* Euro gains vs yen on rise in U.S. retail sales
* Oil trims gains from weaker dollar, demand prospects
* U.S. stocks falter after drop in U.S. consumer sentiment
(Updates with close of European markets)
By Herbert Lash
NEW YORK, March 12 (Reuters) - Global stocks edged higher on
Friday, despite mixed signals on the U.S. economy, as strong euro-
zone economic data dragged the U.S. dollar to a one-month low against
the euro and risk aversion eased a bit.
European shares ended at their highest level in almost two months
as data showing a rise in U.S. retail sales in February surprised
investors who had expected a decline because of inclement weather
during the month. For details see: []
Earlier news that euro-zone industrial output in January recorded
its biggest monthly gain on record, while figures for December were
revised sharply upward, gave European equity markets an initial boost
and at first lifted U.S. stocks. []
But U.S. stocks trimmed those gains to trade little changed after
a weak reading of U.S. consumer sentiment in early March showed
Americans were less positive about the job outlook.
"There are some encouraging signs," said Luc Van Hecka, chief
economist at KBC Securities.
"But there is some legitimate caution," he said. "Governments
have done well in avoiding a depression, but they are left with quite
severe budget deficits. Clearly it's not going to be an easy way so
there are limits and doubts."
MSCI's all-country index <.MIWD00000PUS> gained almost 0.4
percent and the FTSEurofirst 300 <> index of top European
shares ended 0.3 percent higher at 1.058.97 points, its highest close
since Jan. 19.
U.S. stocks traded near break-even. The Dow Jones industrial
average <> was down 4.15 points, or 0.04 percent, at 10,607.69.
The Standard & Poor's 500 Index <.SPX> was down 0.74 of a point, or
0.06 percent, at 1,149.50. The Nasdaq Composite Index <> was
down 2.65 points, or 0.11 percent, at 2,365.81.
The euro <EUR=> gained 1 percent against the dollar at one point
and was up 0.70 percent at $1.3754.
Sterling climbed 1 percent against the dollar to a session high
as investors who had bet against the British pound were forced to buy
to prevent losses. []
The pound was last up 0.9 percent at 1.5200 after going as high
as 1.5217 <GBP=>.
Oil slipped below $82 a barrel, paring gains after reaching a
two-month high earlier in the session because of the drop in U.S.
consumer confidence. []
The front-month U.S. crude <CLc1> contract rose as high $83.16 a
barrel, the highest in two months, but later fell $1.27 to $80.84.
Brent crude <LCOc1> fell $1.36 to $78.92.
U.S. Treasury debt prices rose as the mixed readings on U.S.
economic data raised doubts over the pace of the economic recovery in
advance of next week's Federal Reserve policy meeting.
[]
The weaker U.S. sentiment figure revived a safety bid for bonds,
analysts said.
"In general, when you get mixed data in this environment, you
still have a lot of dollars willing to commit to Treasuries," said
Russ Certo, co-head of the rates group at Broadpoint Gleacher in New
York.
Bonds initially fell after investors saw growth in retail sales,
but they rebounded from session lows after the consumer sentiment
survey unexpectedly fell, kindling fears the spending pick-up would
fade and slow the recovery.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up 10/32
in price to yield 3.70 percent.
In Europe, 10-year euro zone government bonds were the main
beneficiaries of weaker Wall Street shares and the below-forecast
U.S. consumer sentiment survey. Concern over Greece's debt took a
back seat. []
The 10-year German bond yield <EU10YT=RR>, which moves inversely
to price, was down 0.7 basis points at 3.155 percent.
(Reporting by Ryan Vlastelica, Nick Olivari, Richard Leong in New
York; Atul Prakash, Chris Baldwin, Jan Harvey and Pratima Desai in
London; Writing by Herbert Lash; Editing by Jan Paschal)
