NEW YORK/LONDON, Feb 9 (Reuters) - The S&P 500 crossed the 5,000-point milestone on Friday as U.S. inflation data raised expectations the Federal Reserve will cut interest rates this year, as closely watched U.S. Treasury yields rose and European shares eased.
The greenback dipped after the U.S. data, but was still headed for a fourth weekly rise.
Oil LCOc1 rose, with worries lingering of a broadening conflict in the Middle East after Israel rejected a ceasefire offer from Hamas.
The MSCI All Country stock index (.MIWD00000PUS), opens new tab was up 0.24% by 11:08 a.m. EST (1608 GMT).
The mood in stock markets was buoyed by Wall Street, where the S&P 500 index (.SPX), opens new tab rose above 5,000 points for the first time ever, capping a 21% surge since October.
"A close above this closely watched level will undoubtedly create headlines and further feed fear of missing out (FOMO) emotions," said Adam Turnquist, chief technical strategist for LPL Financial in Charlotte, North Carolina.
"Outside of a potential sentiment boost, round numbers such as 5,000 often provide a psychological area of support or resistance for the market. Researchers often refer to them as ‘cognitive shortcuts’ that create a round-number bias."
U.S. monthly consumer prices rose less than initially estimated in December, but underlying inflation remained a bit warm, data showed on Friday.
U.S. inflation data for January is also coming next week.
The Dow Jones Industrial Average (.DJI), opens new tab fell 72.18 points, or 0.19%, to 38,654.15; the S&P 500 (.SPX), opens new tab gained 17.23 points, or 0.35%, to 5,015.24; and the Nasdaq Composite (.IXIC), opens new tab gained 148.33 points, or 0.92%, to 15,942.04.
The yield on benchmark U.S. 10-year notes rose 1.9 basis points to 4.189%, from 4.17% late on Thursday. The two-year note yield, which typically moves in step with interest rate expectations, rose 3 basis points to 4.4862%, from 4.456% late on Thursday.
The STOXX 600 (.STOXX), opens new tab index fell 0.08%, while Europe's broad FTSEurofirst 300 index (.FTEU3), opens new tab fell 1.55 points, or 0.08%.
Inflation in Germany, Europe's biggest economy, eased in January to 3.1%, adding fuel to bets on when the European Central Bank will begin easing rates.
However, euro zone bond yields hit multi-week highs after several ECB rate setters warned against easing monetary policy too early.
"Indeed, it seems pretty clear now that the ECB will be waiting for European wage data statistics at the end of April before likely cutting rates in June," ING bank said in a note to clients.
Japanese shares hit 34-year highs. The yen recovered after falling to a 10-week low, with traders reassessing their bets on how quickly the Bank of Japan might raise rates.
In China, mainland markets were closed and Hong Kong traded thinly and shut early, with the Hang Seng (.HSI), opens new tab down 0.8% amid worries that authorities may not deliver on promises for support.
"I am betting that (decisive action) is happening," said Chi Lo, senior markets strategist for Asia Pacific at BNP Paribas Asset Management.
In commodities, U.S. crude futures gained 0.39% to $76.59 a barrel and the benchmark Brent contract rose to $81.77 per barrel on the day.
Spot gold lost 0.62% to $2,020.59 an ounce. U.S. gold futures fell 0.6% to $2,020.00 an ounce.
Reporting by Huw Jones; Additional reporting by Tom Westbrook; Editing by Lincoln Feast, Kirsten Donovan and Jonathan Oatis
