RPT-GLOBAL MARKETS-World stocks off highs after mixed US data

                                
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 * US stocks flat, world equity index hits 14-month high
                                
 * US labor data better-than-expected, services weaker
                                
 * BofA move to repay taxpayer funds boosted optimism
                                
 * Dollar, yen remain under pressure; Nikkei rallies
                                
 (Changes dateline from LONDON, adds U.S. data and trading)
                                
 By Al Yoon
                                
 NEW YORK, Dec 3 (Reuters) - World stocks stalled after
reaching a 14-month high as mixed U.S. economic data gave
investors reason to limit moves into riskier investments.
                                
 Data showing the U.S. service sector contracted in November
after growing modestly the prior month raised doubts about the
strength of U.S. recovery and undermined risk appetite,
weakening stocks and trimming euro gains.
                                
 The U.S. services report "doesn't seem to get as much
weight as the manufacturing (data), but seeing it head in this
direction is not a positive sign," said Dan Cook, senior market
analyst at IG Markets in Chicago.
                                
 The drop in world equities from a 14-month intraday high
reflected the skittishness of investors who at year end want to
protect profits earned since March. Stocks had been rising
since Bank of America Corp. on Wednesday said it was able to
repay $45 billion of taxpayer bailout funds, which suggested
strength in the financial sector.
                                
 Investors are also wary of extending risk ahead of the U.S.
November employment report on Friday, as persistent joblessness
is seen hindering economic growth. A report on Thursday pointed
to recovery, showing new applications for U.S. jobless benefits
unexpectedly fell last week.
                                
 In the United States, the Dow Jones Industrial Average
<.DJI> fell 10.05 points, or 0.10 percent, to 10,442.63. The
Standard & Poor's 500 Index  <.SPX> edged down 0.03 percent to
1,108.89 and The Nasdaq Composite Index <.IXIC> climbed 0.29
percent to 2,191.39.
                                
 Shares of Bank of America <BAC.N>, the largest bank by
assets, rose 2.4 percent at $16.02.
                                
 The euro clung to gains against the U.S. dollar on Thursday
after the European Central Bank hinted it would slowly start
withdrawing emergency spending while the yen fell amid fears
Japan may move to weaken its currency.
                                
 Though the ECB left interest rates at record lows, its
president Jean-Claude Trichet said the next 12-month
refinancing operation for banks would be the last. The bank
also lifted its growth forecast for 2010. [ID:nECBNEWS]
                                
 That sent the euro near a 16-month high around $1.5140 and
pushed it to its highest level against the yen in a week. But
it pared those gains after Trichet said interest rates remain
appropriate and did not offer a timetable for winding down the
ECB's ultra-loose monetary policy.
                                
 Such policies tend to undermine a currency's value because
they increase money supply and risk higher inflation.
                                
 At midday, the euro <EUR=> rose 0.23 percent to $1.5079.
Against the Japanese yen, the dollar <JPY=> climbed 0.83
percent to 88.18 yen.
                                
 Despite listless U.S. stocks, world equities have erased
all the losses suffered after Dubai announced a standstill last
week on billions of dollars of debt held by its conglomerate
Dubai World, with investors taking risk-friendly outlooks that
the world's central banks would keep interest rates low.
                                
 "This is certainly one of the reasons for the positive
market sentiment today," said Joerg Rahn, chief investment
officer at wealth management company Marcard, Stein & Co in
Hamburg.
                                
 The MSCI world equity index <.MIWD00000PUS> rose as high as
302.83, its highest level since late September 2008. It was
higher by 0.22 percent at midday in New York, at 300.99.
                                
 Japan's Nikkei average soared nearly 4 percent to its
highest close in five weeks as exporters such as Canon Inc
<7751.T> jumped on the weaker yen.
                                
 The FTSEurofirst 300 index <.FTEU3> fell 0.14 percent,
while emerging stocks <.MSCIEF> rose 0.7 percent.
                                
 The Markit survey showed the euro zone's service sector
expanded for the third consecutive month in November,
underpinning the recovery optimism, although the expansion was
at a slower pace than reported early last week.
                                
 In energy and commodities prices, U.S. light sweet crude
oil <CLc1> fell 33 cents, or 0.43 percent, to  $76.27 per
barrel,, and spot gold prices <XAU=> fell $4.80, or 0.40
percent, to  $1209.70.
                                
 U.S. government bond prices  fell, sending yields to
one-week highs, after the jobless claims report suggested the
economy recovery was taking hold and as investors prepared to
buy $74 billion in Treasury debt next week.
                                
 The U.S. services sector report capped speculation of
faster growth, limiting selling.
                                
 Yields on benchmark 10-year Treasury notes rose 0.06
percentage point to 3.37 percent.
                                
 German government bond futures <FGBLc1>, the euro zone
benchmark, fell 0.17 percent.
                                
 (Additional reporting by Christoph Steitz in Frankfurt and
Steven C. Johnson and Chuck Mikolajczak in New York)
                                
 ((albert.yoon@thomsonreuters.com; +1 646-223-6347; Reuters
Messaging: albert.yoon.reuters.com@reuters.net))