World shares flat but Wall St gains; S&P 500 at new high

(REUTERS) - World equity indexes were near five-year highs on Friday as major United States (US) technology companies propelled Wall Street to another day of gains, sending the S&P 500 index to close at a record.

Reversing early weakness, the euro slightly rose against the dollar, hovering close to a two-year high, as souring German business morale did little to dent bullish sentiment toward the euro zone common currency.

While equity markets in Europe and Asia were weaker, Wall Street extended its recent climb, helped by gains in technology shares after strong results from Microsoft (MSFT.O) and (AMZN.O). Microsoft shares ended up 6 per cent at $35.73 while added 9.4 per cent to $363.39.

The S&P 500 has gained about 23.4 per cent so far this year, just shy of its 23.5 per cent jump in 2009. Surpassing that level would give the index its biggest annual gain in a decade.

"It seems like good news is being responded to very well and bad news is just seen as more evidence the Fed won't be able to tighten anytime soon," said Mr Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

The market has risen following last week's deal to avoid a US debt default and end a partial government shutdown, as well as increased speculation the Federal Reserve will delay scaling back its stimulus for several months. The S&P 500 had hit record finishes for four sessions until Wednesday.

MSCI's world share index .MIWD00000PUS, which tracks 45 countries, was flat near a five-year high, erasing early weakness.

Nikkei futures index fell 1.6 per cent 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 .DJI rose 61.07 points, or 0.39 per cent, to 15,570.28, the S&P 500 .SPX gained 7.71 points or 0.44 per cent, to 1,759.78 and the Nasdaq Composite .IXIC added 14.401 points or 0.37 per cent, to 3,943.361. For the week, the Dow rose 1.1 per cent, the S&P 500 was up 0.9 per cent and the Nasdaq added 0.7 per cent.

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 .FTEU3 closed 0.1 per cent lower at 1,284.76, but for the week was up 0.6 per cent for a third straight week of gains after hitting a five-year high on Tuesday.

In the currency market, the euro was up 0.1 per cent at $1.3808, not far from an earlier peak of $1.3832, its highest since November 2011. Against the yen, the euro was up 0.2 per cent at 134.48 yen.

The dollar was flat against a basket of six major currencies at 79.178 .DXY, off a near nine-month low of 78.998.

US Treasury debt prices rose, with benchmark yields hovering near three-month lows, as investors shifted their focus to the Federal Reserve meeting next week, where it might signal it will stick to the current size of its bond-purchase stimulus.

The bond market has traded in a tight range since Tuesday, when yields fell on data that showed employers hired fewer workers than expected in September, stoking fears the economy was slowing even before the government's 16-day shutdown.

The 10-year note yield was on track to fall for a second straight week, though it has struggled to decline much below the chart resistance of 2.50 per cent.

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