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

* European shares close lower as luxury goods makers slide * S&P 500 closes flat; retailers strong * China's yuan steady after Tuesday's slide, ruble hits 5-year low * Gold touches four-month peak * Fed Chair Yellen to testify to Senate on Thursday By Chuck Mikolajczak NEW YORK, Feb 26 (Reuters) - World stock markets dipped on Wednesday, stung by growing worries over some emerging markets as escalating tensions in Ukraine sent the Russian ruble to a five-year low, while equities on Wall Street ended flat.

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 saw gains fade in the latter portion of trading, failing in its latest attempt to break its record closing high of 1,848.38 set on Jan. 15. Data showing 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, but was not enough to lift the benchmark S&P index over what has proven to be a strong resistance level.

"It just seems like there's an absence of buyers once we hit this area. There's no firm commitment to drive the S&P back above this particular level," said Todd Salamone, Senior Vice President of Research at Schaeffer's Investment Research in Cincinnati, Ohio.

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 United States warned Russia it would be a "grave mistake" to embark on a military intervention in Ukraine and said Washington was considering $1 billion in U.S. loan guarantees for Kiev.

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 were a bright spot for a second straight session, with the S&P retail index up 1.4 percent.

Shares of Lowe's Cos Inc, the No. 2 U.S. home improvement retailer, rose 5.4 percent to $50.72 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 percent to $60.49.

The Dow Jones industrial average rose 18.75 points or 0.12 percent, to 16,198.41, the S&P 500 gained 0.04 points to stay virtually flat, to 1,845.16 and the Nasdaq Composite added 4.477 points or 0.1 percent, to 4,292.064.

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.

"We have a new Fed Chair on Capitol Hill tomorrow, and there's just that hesitancy to push stocks up into these new highs," said Salamone.

The MSCI world equity index, which tracks shares in 45 nations, fell 0.9 point or 0.22 percent, to 407.44.

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 0.3 percent to 80.503 after hitting a high of 80.524, it strongest level since February 13.

The euro fell against the dollar, down 0.44 percent at $1.3684. Against the yen, the dollar was up 0.14 percent at 102.36.

U.S. Treasuries, the benchmark for global borrowing costs, rose 10/32 in price on the benchmark 10-year note to yield 2.665 percent.

Gold retreated after earlier on Wednesday hitting four-month highs as the dollar advanced and the new home sales data dented bullion's safe-haven appeal. Spot gold earlier touched its highest level since Oct. 30, at $1,345.35 an ounce before falling 0.9 percent while U.S. COMEX gold futures for April delivery settled down $14.70 at $1,328 an ounce.

Brent crude rose 1 cent to settle at $109.52 a barrel and U.S. oil settled up 76 cents at $102.59, after government data showed a surprisingly small build in crude inventories and another large drawdown at the American benchmark's delivery point.