By Caroline Valetkevitch
NEW YORK (Reuters) - World stock indexes slipped on Monday after services sector data in China and the United States revived concerns about slow growth, while gold climbed for a third session.
U.S. Treasuries prices rose after the U.S. data raised the question of whether the Federal Reserve might slow its reduction of bond purchases.
The Institute of Supply Management's index of U.S. service industry activity unexpectedly fell in December, showing a slowdown in growth, while a separate report showed U.S. private sector economic activity growth slowed slightly in December.
The results go against recent U.S. data, including last week's factory activity report, that confirmed underlying strength in the economy and suggested the Fed was justified in deciding in December to begin scaling back its stimulus program.
Outside the United States, figures showing that China's services sector growth slowed sharply last month added to a stack of disappointing data from the world's second-largest economy over the past week.
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MSCI's world stock index , which tracks 45 countries, fell 0.3 percent and was down for a third session, while all three major U.S. stocks indexes ended lower. The benchmark S&P 500 also has stumbled in the first three trading sessions of 2014 and is down more than 1 percent so far for January.
The Dow Jones industrial average fell 44.89 points or 0.27 percent, to end at 16,425.10. The S&P 500 lost 4.60 points or 0.25 percent, to finish at 1,826.77. The Nasdaq Composite dropped 18.226 points or 0.44 percent, to close at 4,113.681.
Traders are still second-guessing the Fed's assessment of recent economic data and how it might alter the U.S. central bank's plan to withdraw its quantitative easing stimulus, said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois.
"On balance, today's data is not going to raise concerns the Fed may accelerate the taper," he said.
Wednesday's impending release of the minutes of the December meeting of Fed policymakers and Friday's non-farm payrolls data could give further clues on how quickly the Fed is likely to scale back its huge stimulus program in the coming months.
The U.S. Senate is set to vote at 5:30 p.m. (2230 GMT) to confirm Janet Yellen as the next chair of the Fed. Yellen, who has been the Fed's vice chair since 2010, is poised to become the first woman to head the U.S. central bank. She is widely seen as continuing the policies set in place by Ben Bernanke, who will step down as Fed chairman at month's end.
The U.S. and Chinese data were somewhat offset by positive euro zone data and other U.S. data. Data showed some signs of gradual recoveries in Italy and Spain, while a report showed a rebound in new orders for U.S. factory goods.
Still, the pan-regional FTSEurofirst 300 ended down 0.2 percent after erasing earlier gains.
The euro zone Composite Purchasing Managers Index, which gauges how thousands of manufacturing and services companies fare every month, rose in December, in line with forecasts and was above the level indicating growth.
The dollar fell from one-month highs against the euro and slid to two-week lows against the yen after the services data.
"The dollar's quick dash out of the gates this year encountered a few speed bumps on cooler U.S. services growth last month and caution ahead of risk events this week involving the Federal Reserve and the government's monthly jobs report," said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.
The U.S. government's labor market report for December will be released on Friday.
The euro recovered from a one-month low against the dollar to trade 0.33 percent higher at $1.3630.
The dollar was last down 0.5 percent against the year, to 104.26 yen, according to Reuters data. That was the largest daily percentage drop since October.
In the U.S. bond market, the benchmark 10-year U.S. Treasury note rose 8/32 in price to yield 2.963 percent, down 3 basis points from late on Friday.
CHINA DATA SUPPORTS CAUTION
There was plenty of evidence to support the caution recent China data has fostered among investors.
Figures on Monday showing China's huge services sector slowed sharply in December to its lowest point since August 2011 came hot on the heels of a similar official survey on Friday and two other PMIs last week showing factory activity also soured.
GOLD RISES, OIL FALLS
Gold prices rose, with weakness on Wall Street extending bullion's rally. Analysts said gold appeared to find support from equities' losses at the beginning of 2014 following last year's tumble in bullion prices.
Spot gold was trading up 0.3 percent at $1,239.39 an ounce at 3:20 p.m. EST (2020 GMT), having earlier hit a one-week high of $1,248.30.
Oil prices ended the session slightly lower, though reports of production resuming at a Libyan oilfield were offset by new threats to shipments from a port controlled by protesters.
"We're still seeing most of the geopolitical risk hitting Brent, whether it be Libya or Iraq," said Phil Flynn, analyst at the Price Futures Group in Chicago.
Brent crude futures for February ended lower for the fifth straight session, losing 16 cents to settle at $106.73, after earlier climbing over $1 to a session high of $107.96.
U.S. crude futures extended losses for a fifth straight session, weighed down by ample domestic supplies of crude oil. U.S. crude fell 53 cents to settle at $93.43 per barrel. The contract lost $1.48 a barrel on Friday and posted its biggest weekly drop since June 2012.
(Additional reporting by Marc Jones in London, Dominic Lau in Tokyo, and Rodrigo Campos, Frank Tang, Anna Louie Sussman and Curtis Skinner in New York; Editing by Bernadette Baum, Chris Reese and Leslie Adler)