* US consumer confidence up in early December, lifts dollar * Commodity prices drop, U.S. Treasury debt prices weaken * Peripheral European sovereign debt spreads widen (Updates with U.S. markets, changes byline and dateline, previous LONDON)
By Daniel Bases
NEW YORK, Dec 10 (Reuters) - Upbeat U.S. consumer sentiment data on Friday boosted the U.S. dollar on confidence the economy was steadily gaining strength, in turn pushing down the prices of U.S. Treasury debt, oil and gold.
Share prices globally were flat to marginally higher on the day. A stronger greenback squeezes the operating margins for U.S. exporters, feeding into the recent inverse correlation between the currency and U.S. stocks.
The MSCI All-Country World stock index <.MIWD00000PUS> was up just 0.12 percent.
China's central bank raised lenders' required reserves by 50 basis points but left interest rates on hold, which also allayed investors' concerns that aggressive policy tightening could slow China's growth down too much. [ID:nTOE6B907U]
European shares gained on the U.S. data, but are off their highs for the day.
Peripheral European sovereign credit deteriorated on Friday as prices wax and wane while uncertainty remains over whether policymakers can put to rest the concerns the debt crisis is under control.
"The strength of the U.S. dollar could be viewed as waning if it can be demonstrated credibly that U.S. deficits will rise and conversely, the euro could rise comparatively," said Tim Speiss, chairman, Personal Wealth Advisors at EisnerAmper LLP in New York.
"However, the EU has its hands full with financing costs related to Ireland and Greece, and potentially Spain and Portugal, so we see no dramatic negative dollar impact tied to this legislation at this juncture," he said.
The euro fell 0.18 percent to $1.3218
Commodities priced in U.S. dollars weakened on the
currency's gains. Spot gold prices
STOCKS NOTCH SLIM GAINS
U.S. data showed consumer sentiment rose more than expected in early December, while import prices in November rose at their fastest pace in a year. In another report offering evidence of a firmer U.S. economic recovery, the government said the U.S. trade deficit narrowed much more than expected in October. For details, see [ID:nN10294524][ID:nN10198692]
Robert Tipp, chief investment strategist for Prudential Fixed Income in Newark, New Jersey, said the market is likely to be stuck in a range as sentiment vacillates between optimism and pessimism.
"Basically the market, after being excessively pessimistic, is having to re-evaluate following the announcement of QE2, better-than-expected data, and the stimulus from the extension of the tax cuts. So the market had a big swing in sentiment," Tipp said.
U.S. stocks skated between the plus and minus column. In late morning trade, the Dow Jones industrial average <.DJI> inched up just 0.60 of a point, or 0.01 percent, to 11,370.66. The Standard & Poor's 500 Index <.SPX> edged up 1.43 points, or 0.12 percent, to 1,234.43. The Nasdaq Composite Index <.IXIC> gained 4.36 points, or 0.17 percent, to 2,621.03.
Shares of Netflix Inc
The pan-European FTSEurofirst 300 <.FTEU3> index of top shares rose 0.14 percent to 1,125.30, benefiting from the U.S. consumer data.
Japan's benchmark Nikkei stock index <.N225> fell 0.7 percent to close on Friday at 10,211.95 due to profit-taking. But the Nikkei was up 0.3 percent for the week. [ID:nTOE6B906P]
In the credit markets, the premium that investors demand to hold peripheral government bonds rather than benchmark German debt rose on Friday with investors keeping to the sidelines as the European Central Bank's bond buying slowed down to a trickle.
The Portuguese/German 10-year bond yield spread
The benchmark U.S. 10-year Treasury note