GLOBAL MARKETS-Stocks slip on central bank fears, euro on the ropes
* Global stock markets lower, worried by central bank policies Euro remains under pressure after biggest fall vs dollar in 6 mths
* European shares lower but head for 4th week of gains
* Solid China manufacturing data limits Asian share losses
* Dollar index at 2-week peak after U.S. data suggests economy resilient
NEW YORK, Nov 1 (Reuters) - Global equity markets slipped on Friday despite upbeat factory data from around the world, while the euro fell to a two-week low against the dollar as expectations rose a rate cut by the European Central Bank may come by year's end. Stocks on Wall Street slipped after data showing U.S. manufacturing expanded briskly in October raised worries among some that the easy U.S. money policy could be curtailed late in 2013, sooner than investors expected. U.S. stocks have been pressured since Wednesday after the Federal Reserve raised concerns about when it would begin to scale back its economic stimulus program, a major reason for a 23 percent advance this year in the benchmark S&P 500 index. The Institute for Supply Management (ISM) said its index of U.S. factory activity rose to 56.4 last month - its best showing since April 2011 - from 56.2 in September. Economists polled by Reuters had expected a reading of 55. The S&P and Dow Jones industrial average have repeatedly posted record highs this year, the latest earlier in the week, but the strong gains have some worried the rally cannot go on. "I'm not comfortable with the market at all-time highs, especially with earnings being mediocre," said Mark Grant, managing director at Southwest Securities in Fort Lauderdale, Florida. "But the manufacturing report was better than expected, and where else can you go with the Fed putting so much liquidity into the system?" Grant said. The Dow Jones industrial average was up 30.57 points, or 0.20 percent, at 15,576.32. The Standard & Poor's 500 Index was down 0.28 point, or 0.02 percent, at 1,756.26. The Nasdaq Composite Index was down 7.57 points, or 0.19 percent, at 3,912.13. In Europe, the pan-European FTSEurofirst 300 index fell 0.16 percent to a provisional close of 1,290.61.
U.S. Treasuries prices fell for a third consecutive session as the encouraging ISM report on manufacturing suggested the U.S. economy overcame a drag from the partial government shutdown in October. The rosier data revived some worries among investors that the Fed might scale back its bond-buying earlier than expected - at its December meeting - rather than early in 2014. "There is a feeling that they might taper in December. It has gained a little steam, but that's not the consensus," said Matt Duch, a portfolio manager at Calvert Investments in Bethesda, Maryland. The benchmark 10-year U.S. Treasury note was down 19/32 in price to yield 2.6108 percent. Euro zone bonds broadly edged higher, extending this week's rise, after data showed a surprisingly sharp inflation slowdown in the euro zone. Many in the market expect the ECB to signal a rate cut or new liquidity injections at its meeting next week. German two-year yields, the most sensitive to shifts in monetary policy expectations, were 2 basis points lower at 0.11 percent, Bund futures were 20 ticks lower at 141.80, having hit a two-month peak of 142.32 on Thursday. Expectations of a ECB rate cut was seen eroding the euro's interest rate advantage over other major currencies. The single currency was poised to notch its worst weekly loss against the dollar since July 2012. The euro fell to $1.3484. Renewed pressure on the euro saw the dollar index rise to a six-week high of 80.778, pulling further away from a nine-month trough of 78.998 plumbed a week earlier. The dollar last traded up 0.46 percent against the yen at 98.80 yen, according to Reuters data. Brent crude oil dropped by more than $2 to below $107 a barrel as a strong dollar outweighed previous concerns over a drop in Libyan crude exports. Brent crude for December delivery was down by $2.04 at $106.80 after rising as high as $109.41 a barrel in early morning trade. U.S. oil for December was down $1.51 at $94.87, putting it in line for a fourth straight week of declines, its longest losing streak since June 2012.