Global Markets: U.S. dollar, yields climb on data, North Korea lull

By Sinead Carew

NEW YORK (Reuters) - The U.S. dollar and U.S. Treasury yields climbed on Tuesday while stock indexes on Wall Street were little changed after solid U.S. retail data and as North Korea delayed a plan to fire missiles at Guam.

Data for July showed the biggest increase in U.S. retail sales in seven months as consumers ramped up discretionary spending and boosted purchases of motor vehicles, suggesting the economy continued to gain momentum.

North Korean leader Kim Jong Un said he would watch the United States' actions for a while longer before deciding whether to fire missiles towards the U.S. island territory of Guam, the nation's official news agency said.

Equity markets received barely a lift from the data or the lull in rhetoric between the United States and North Korea, a day after the benchmark S&P 500 index achieved its third 1-percent gain so far this year.

"Once you have a good lift in the market like yesterday, it's going to take a little more confidence that it can be sustained, especially at the valuations we're at. We need to have a little more calm down on the political front and geopolitical side," said Omar Aguilar, chief investment officer for equities at Charles Schwab Investment Management in San Francisco.

The Dow Jones Industrial Average rose 9.59 points, or 0.04 percent, to 22,003.3, the S&P 500 gained 0.35 points, or 0.01 percent, to 2,466.19 and the Nasdaq Composite dropped 2.52 points, or 0.04 percent, to 6,337.71.

While U.S. retail data was strong, investor worries about the outlook for home improvement retailers dragged on the S&P, with Home Depot and Lowes Companies representing the biggest drags on the benchmark.

The pan-European FTSEurofirst 300 index rose 0.09 percent and MSCI's gauge of stocks across the globe shed 0.10 percent.

Benchmark U.S. Treasury yields hit one-week highs as investors pared low-risk bond holdings on signs of easing U.S.-North Korean tensions and strong domestic retail sales and regional factory activity data.

Benchmark 10-year notes last fell 13/32 in price to yield 2.2623 percent, from 2.218 percent late on Monday.

GREENBACK GAINS

The U.S. dollar rose to its highest in nearly three weeks against a basket of major currencies for two main reasons, according to Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, D.C.

"One was that the consumer had been a no-show in recent months," said Manimbo, adding, "the spectre of cooler heads prevailing on the geopolitical front is dollar positive, particularly against safe-haven rivals."

The dollar index rose 0.49 percent, with the euro down 0.44 percent to $1.1726.

The Japanese yen weakened 0.81 percent versus the greenback at 110.52 per dollar, while Sterling was last trading at $1.2861, down 0.79 percent on the day.

Spot gold dropped 0.7 percent to $1,272.64 an ounce.

Oil prices held steady after Monday's heavy selloff, weighed by a strong U.S. dollar - which makes oil more expensive for overseas buyers - and signs of weaker demand in China, the world's second-largest consumer.

U.S. crude settled down 0.08 percent. In late trade it rose 0.06 percent to $47.62 per barrel and Brent was last at $50.86, up 0.26 percent on the day.

MSCI's broadest index of Asia-Pacific shares outside Japan ended the day unchanged. Japan's Nikkei stock index <.N225> ended 1.1 percent higher, boosted by the weaker yen, more than erasing the previous day's losses.

(Additional reporting by Dion Rabouin and Richard Leong in New York; Nigel Stephenson, John Geddie and Kit Rees in London, Lisa Twaronite in Tokyo; Editing by Nick Zieminski and Bernadette Baum)