World shares dip but tech earnings lift Wall Street

Reuters
Traders work on the floor of the New York Stock Exchange, October 25, 2013. REUTERS/Brendan McDermid
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Traders work on the floor of the New York Stock Exchange, October 25, 2013. REUTERS/Brendan McDermid

By Angela Moon

NEW YORK (Reuters) - World equity indexes edged down on Friday but were near five-year highs as strong earnings from major U.S. technology companies propelled Wall Street to another day of gains.

The euro dropped from a near two year-high against the dollar, pressured by a survey showing an unexpected fall in German business morale.

While equity markets in Europe and Asia were weaker, on Wall Street the S&P 500 was on track to close at an all-time high as shares of Amazon surged 9 percent and Microsoft rose 6.5 percent following their quarterly results. The Dow was also approaching its all-time high, and the Nasdaq touched its highest level in 13 years.

The S&P 500 has gained 23 percent so far this year, just shy of its 23.5 percent jump in 2009. Surpassing that level would give the index its biggest annual gain in a decade. The S&P 500 on Friday afternoon was on track for a third straight week of gains.

"We've been positive on Microsoft for a while, but I can't remember the last time I saw it move up this much after earnings. It is very positive, and helping to boost the overall tape today," said Douglas DePietro, managing director at Evercore Partners in New York.

"Still, the market has been getting tired lately. While I believe we'll see another leg up soon, it isn't out of the question that we would need to consolidate near all-time highs."

MSCI's world share index, which tracks 45 countries, was down 0.1 percent but still near a five-year high.

Nikkei futures index fell 1.6 percent following news that a large earthquake struck in the ocean east of Japan, triggering a small tsunami. There were no immediate reports of damage on land from the quake, classified as magnitude 7.1 by the Japan Meteorological Agency, which struck about 370 km (230 miles) out to sea.

Japan's Nikkei stock average suffered its biggest one-day loss in 2-1/2 months on Friday, hit by the yen's strength against the dollar.

On Wall Street, the Dow Jones industrial average was up 28.38 points, or 0.18 percent, at 15,537.59. The Standard & Poor's 500 Index was up 4.58 points, or 0.26 percent, at 1,756.65. The Nasdaq Composite Index was up 11.45 points, or 0.29 percent, at 3,940.41.

The better-than-expected earnings late on Thursday from Amazon Inc (AMZN.O) and Microsoft (MSFT.O) boosted investor confidence in an earnings season that has been slightly disappointing, though Google Inc (GOOG.O) topped expectations. Next week's earnings spotlight will be on tech companies like Apple Inc (AAPL.O) and Facebook Inc (FB.O).

European equities ended slightly lower on Friday, with Telecom Italia leading the telecoms sector down on concerns of a capital hike by the Italian company and Volvo hurting industrials after reporting a sharp drop in profits.

The pan-European FTSEurofirst 300 index closed 0.1 percent lower at 1,284.76 points, but for the week was up 0.6 percent for a third straight week of gains after hitting a five-year high on Tuesday.

In currency markets, the euro hovered close to a two-year high against the dollar as a souring of German business morale did little to dent bullish sentiment toward the euro zone common currency.

Still, the euro's fall was minimal and many analysts say the single currency could rise toward $1.40 as investors seek alternatives to a dollar hobbled by expectations the Federal Reserve will maintain its current level of monetary stimulus.

In afternoon New York trading, the euro was unchanged at $1.3804, not far from an earlier peak of $1.3833, its highest level since November 2011.

The dollar was up 0.1 percent against the yen at 97.38 yen, off a two-week low of 96.94 and above its 200-day moving average, a key chart level, at 97.34, suggesting room for more gains.

After a choppy week for commodities markets, Brent crude for December settled down 6 cents to $106.93 a barrel while U.S. crude oil ended up 74 cents at $97.85.

U.S. Treasuries prices edged up as investors waited on new signs about the strength of the economy, which is key to the timing of when the Fed is likely to reduce its bond purchase program.

Treasuries have been largely rangebound since Tuesday, after data showed employers hired fewer workers than expected in September, stoking fears the economy was slowing even before the government's 16-day shutdown.

Benchmark 10-year notes were last up 2/32 in price to yield 2.51 percent. The yields have fallen from 3.00 percent on September 5, before the Fed surprised investors by leaving its bond purchase program unchanged.

(Reporting by Angela Moon; Editing by Leslie Adler)

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