* U.S. Retail sales data tops expectations
* German investor morale survey worse-than-expected
* Mounting no-deal Brexit worries knock pound
By Chuck Mikolajczak
NEW YORK, July 16 (Reuters) - A gauge of global equities edged lower on Tuesday and U.S. Treasury yields climbed as a stronger-than-anticipated report on retail sales raised the possibility that a second rate cut by the Federal Reserve this year could be pushed back by several months.
U.S. retail sales rose 0.4% in June, as households stepped up purchases of motor vehicles and a variety of other goods. The solid number comes on the heels of recent data showing a strong labor market and a pickup in consumer prices. the Fed is still largely expected to cut rates by a quarter of a percentage point at its July 30-31 policy meeting, expectations for a more aggressive half a percentage point cut have been scaled back. of the things I have been wringing my hands over is this divergence between very strong consumer confidence and retail sales that have just been going nowhere so maybe we are starting to close the gap," said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.
"I don't know if this is going to take the Fed off its July easing plan but it could perhaps push the second rate reduction out a few months."
The Dow Jones Industrial Average .DJI rose 17.04 points, or 0.06%, to 27,376.2, the S&P 500 .SPX fell 3.12 points, or 0.10%, to 3,011.18 and the Nasdaq Composite .IXIC dropped 9.50 points, or 0.12%, to 8,248.68.
With earnings season underway, banking shares were in focus after a mixed bag of results from JPMorgan (NYSE:JPM) JPM.N , Goldman Sachs (NYSE:GS) GS.N and Wells Fargo (NYSE:WFC) WFC.N . The S&P banks sector was off 0.2%. data showed manufacturing output in the U.S. picked up steam in June, while import prices declined the most in six months. data boosted U.S. Treasury yields, while the improving economic picture has seen the U.S. yield curve steepen in the past week. 10-year notes US10YT=RR last fell 11/32 in price to yield 2.1288%, compared with 2.092% late on Monday.
European equities rose as disappointing data out of Germany and new concerns over Brexit helped boost expectations for stimulus from the European Central Bank.
Germany's ZEW indicator showed that the mood among investors in Europe's largest economy deteriorated more than expected in July, with the survey pointing to the unresolved China-U.S. trade dispute and to political tensions with Iran. pan-European STOXX 600 index .STOXX rose 0.38% and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.08%.
The dollar strengthened versus the euro as a result of the disparate data while a debate between the two candidates to become Britain's next prime minister sent the pound tumbling because of heightened worries about a no-deal Brexit. dollar index .DXY rose 0.35%, with the euro EUR= down 0.34% to $1.1219. Sterling GBP= was last trading at $1.2415, down 0.81% on the day.
Oil prices steadied as a resumption of production in the Gulf of Mexico after Hurricane Barry and a boom in U.S. supply from shale oil countered tensions in the Middle East. crude CLcv1 rose 0.03% to $59.60 per barrel and Brent LCOcv1 was last at $66.76, up 0.42% on the day.
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http://tmsnrt.rs/2jvdmXl Global currencies vs. dollar
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