By Sinéad Carew and Yoruk Bahceli
(Reuters) -A global equities index fell slightly on Monday after hitting record highs last week, as investors took a breather ahead of the next batch of U.S. economic data, while oil prices rallied on concerns about shipping disruptions.
U.S. Treasury yields rose after an auction while the dollar fell slightly against a basket of currencies including the euro although it gained ground slightly against the yen.
On Monday sales of new U.S. single-family homes rose less than expected in January amid a sharp decline in the South region, but demand for new construction remained underpinned by a persistent shortage of previously owned homes. In addition, Dallas Federal Reserve manufacturing data was positive.
"The resiliency of the economy is shining through here. What that means is maybe that rates stay a little higher for longer," said Matt Stucky, chief portfolio manager for equities at Northwestern (NASDAQ:NWE) Mutual Wealth Management.
Investors are waiting for data on U.S. durable goods orders due out on Tuesday and the U.S. Federal Reserve's favored measure of inflation - the core personal consumption expenditures (PCE) price index - is due on Thursday.
"The PCE price inflation index (is) expected to show a little bit more inflation, in line with the numbers that we saw with the CPI and PPI, so the markets are bracing for that," said Peter Cardillo, chief market economist at Spartan Capital Securities, referring to readings of the consumer price index and the producer price index.
The data will provide the next test for investors, who have had to rethink their bets on central bank rate cuts in recent weeks, surprised by strong U.S. job growth and inflation.
Investors were also watching the risk that U.S. government agencies could be shut down if Congress cannot agree on a borrowing extension by Friday.
On Monday the Dow Jones Industrial Average fell 62.30 points, or 0.16%, to 39,069.23 while the S&P 500 dropped 19.27 points, or 0.38%, to 5,069.53 and the Nasdaq Composite lost 20.57 points, or 0.13%, to finish at 15,976.25.
The U.S. stock market had risen to record highs last week with help from a bullish financial update from AI pioneer Nvidia (NASDAQ:NVDA).
MSCI's gauge of stocks across the globe fell 1.97 points, or 0.26%, to 759.21. The STOXX 600 index had closed down 0.37%.
DEBT AUCTION
Commodity-linked stocks put pressure on European indexes on Monday after the STOXX 600 hit record highs last week as comments from ECB policymakers had prompted optimism over rate cuts on Friday.
Japan's blue-chip Nikkei scaled record highs for the second consecutive trading session, supported by upbeat performances in pharmaceuticals, although profit-taking limited momentum. The Nikkei closed up 135.03 points, or 0.35%, to 39,233.71.
But MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.43% lower 0.43%, at 526.50.
U.S. Treasury yields rose on Monday as investors sought a higher premium for taking on a record $127 billion in government coupon debt at two auctions that suggested demand was a bit weak ahead of key inflation data later in the week.
The yield on benchmark U.S. 10-year notes rose 1.7 basis points from 4.26% late on Friday while the 30-year bond yield rose 1.4 basis points to 4.3942% from 4.38%. The 2-year note yield, which typically moves in step with interest rate expectations, rose 3.2 basis points to 4.7225%, from 4.69% late on Friday.
In currencies, the dollar index edged down ahead of U.S. durable goods orders and the inflation reading.
The dollar index fell 0.19% to 103.77, with the euro up 0.29% at 1.085.
Against the Japanese yen, the dollar strengthened 0.12% to 150.68 ahead of Japanese inflation data due on Tuesday, forecast to slow to 1.8%. That could add to the case against policy-tightening by the Bank of Japan, the holdout dove among developed market central banks.
In commodities, oil prices gained on Monday as European diesel demand, constrained by Russian sanctions and shipping disruptions, pulled prices higher in a market jittery with U.S. refinery output limited by planned overhauls, analysts said.
U.S. crude settled up 1.43% at $77.58 a barrel and Brent finished at $82.53 per barrel, up 1.11%.
Spot gold lost 0.2% to $2,031.55 an ounce. U.S. gold futures fell 0.68% to $2,024.80 an ounce. Copper lost 1.38% to $8,449.00 a tonne.