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GLOBAL MARKETS-World stocks dip, but Wall St up; ruble at 5-yr low

* European shares close lower as luxury goods makers slide * S&P 500 above record closing high; retailers strong * China's yuan steady after Tuesday's slide * Ruble hits five-year low on Ukraine fallout * Gold touches four-month peak * Fed Chair Yellen to testify to Senate on Thursday By Chuck Mikolajczak NEW YORK, Feb 26 (Reuters) - World stocks markets edged lower on Wednesday, stung by growing worries over some emerging markets grew as escalating tensions in the Ukraine sent the Russian ruble to a five-year low, while equities on Wall Street rose.

The drop in the ruble came a day after China's yuan had its biggest drop in three years, which weighed on shares of European luxury goods makers because of their heavy exposure to emerging markets.

The S&P 500 was on track to break its record closing high of 1,848.38 set on Jan. 15, as data showing that sales of new U.S. single-family homes surged to a 5-1/2-year high in January eased concerns about a slowing of economic momentum. The upbeat data was welcome after a string of soft economic releases, although investors have shown a willingness of late to forgive disappointing data due to harsh winter weather.

"The new-home sales did give us reason for some optimism today, although it does look like sort of an anomalous data point, especially given it was up so strongly in the East," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

"The market has really wanted to overlook any sort of negative news and it continues that pattern." The ruble slid as tensions escalated in Ukraine, after Russian President Vladimir Putin ordered drills by his armed forces to test combat readiness in western Russia, near the border with Ukraine.

The threat of debt default by Ukraine also increased. Russia holds $3 billion worth of Ukrainian debt issued last December, which could end up in default if certain terms are breached.

Ukraine has asked the International Monetary Fund to help prepare a new financial aid program, while the country's central bank chairman said the new government would soon have its own anti-crisis program ready.

The ruble was at 36.025 to the dollar, after touching its lowest level since March 2009. Ukraine's hryvnia hit a record low of 10 per dollar.

The market moves come as some investors have already been pulling money out of emerging markets and putting it back into better-understood developed economies.

Chinese shares and the yuan stabilized after sharp falls on Tuesday, although dealers suspect the People's Bank of China was maintaining a gradual squeeze on the yuan , to inject more two-way volatility into the market and wrong-foot speculators betting it would keep rising.

The country's foreign exchange regulator said a dip in the yuan is normal as some investors unwind their long bets on the currency, helping inject two-way exchange rate volatility over time.

On Wall Street, retailers contributed to gains for a second straight session, with the S&P retail index up 2.7 percent.

Shares of Lowe's Cos Inc, the No. 2 U.S. home improvement retailer, jumped 6.47 percent to $51.21 after the company reported strong growth in quarterly sales, showing that it was narrowing the gap with market leader Home Depot Inc .

Target Corp shares climbed to an almost six-week high after the company reassured investors that customers were beginning to return to its U.S. stores, suggesting that the lingering impact of a data breach that affected millions of shoppers may not be as bad as some had feared. Shares of Target jumped 7.6 percent to $60.79.

The Dow Jones industrial average rose 43.19 points or 0.27 percent, to 16,222.85, the S&P 500 gained 5 points or 0.27 percent, to 1,850.12 and the Nasdaq Composite added 23.303 points or 0.54 percent, to 4,310.89.

Gains on Wall Street were held in check ahead of testimony by Federal Reserve Chair Janet Yellen before the U.S. Senate on Thursday. She is likely to get questions on the recent spate of soft U.S. economic news and what it might mean for policy.

The MSCI world equity index, which tracks shares in 45 nations, fell 0.53 point or 0.13 percent, to 407.82.

The pan-European FTSEurofirst 300 closed down 0.2 percent at 1,348.75 points, weighed down by declines in luxury goods makers.

Shares of LVMH finished down 1.6 percent, Kering fell 2.2 percent, and Hermes was down 0.2 percent. The weakness was attributed to a note from Credit Suisse analysts who downgraded the sector to "benchmark" from "overweight," citing the sector's big exposure to China and other emerging markets.

Credit Suisse was also in the spotlight, down 0.7 percent as a U.S. Senate subcommittee alleged new misdeeds by the Swiss lender.

The dollar rose to its highest level in two weeks against a basket of major currencies as investors sought safety on the geopolitical tensions in Russia and Ukraine.

The dollar index rose 0.5 percent to 80.503 after hitting a high of 80.524, it strongest level since February 13.

The euro fell against the dollar, which was down 0.53 percent at $1.3672. Against the yen, the dollar was up 0.32 percent at 102.55.

Yields on 10-year U.S. Treasury notes inched down to 2.688 percent.

Gold retreated after earlier on Wednesday hitting four-month highs as the dollar firmed, but was still seen benefiting from uncertainty over China's economic policies and worries about the U.S. recovery in the short term. Spot gold touched its highest level since Oct. 30, at $1,345.35 an ounce, before falling 0.9 percent at $1,327.56.10.