NEW YORK Global equity markets fell and the euro slid against the dollar on Thursday after data showed the euro zone slipped deeper into recession in late 2012 than had been expected, but deal-making helped Wall Street close near break-even.
U.S. weekly jobless data and a $23.2 billion bid in cash by Warren Buffett's Berkshire Hathaway (BRKa.N) and private equity firm 3G Capital for ketchup and baby food maker H.J. Heinz HNZ.N helped turn sentiment about Europe and trim equity losses.
The euro tumbled to a three-week low against the dollar and plunged against the yen after data on gross domestic product in the euro zone painted a dismal picture of the regional economy.
U.S. equities have struggled to break above current levels where they have hovered for almost two weeks. The benchmark S&P 500 is up more than 6 percent so far this year.
"While I'm not bearish, I don't see many upside motivations at these levels," said Donald Selkin, chief market strategist at National Securities in New York, who cited the low level of the VIX as a sign the market was overbought.
"We need to digest some of our gains to go higher, but people are so eager to buy on the dips that we're not even seeing dips anymore. People are just chasing the market higher," said Selkin, who helps oversee about $3 billion in assets.
The Dow Jones industrial average .DJI closed down 9.52 points, or 0.07 percent, at 13,973.39. The Standard & Poor's 500 Index .SPX rose 1.05 points, or 0.07 percent, at 1,521.38. The Nasdaq Composite Index .IXIC added 1.78 points, or 0.06 percent, at 3,198.66.
Global equities, as measured by MSCI's all-country world equity index .MIWD00000PUS, fell 0.11 percent to 356.36.
Berkshire and the private equity firm will pay $72.50 a share for Heinz. Investors said the deal bodes well for equities, even with the S&P 500 trading at five-year highs.
"The only reason a company buys another company is because they see an upside. Even though we are at multiyear highs, this kind of activity shows that there is more room for a rally, feeding optimism to the market," said Randy Frederick, director of trading and derivatives at Charles Schwab.
Shares of Constellation Brands (STZ.N) soared 37 percent to $43.75 after a revised AB InBev takeover of Mexican brewer Grupo Modelo GMODELOC.MX granted Constellation perpetual rights to distribute Corona and other Modelo brands in the United States.
AB InBev ADRs (BUD.N) gained 5.1 percent to $92.76.
Economic output in the euro zone fell by 0.6 percent in the fourth quarter, EU statistics office Eurostat said, while Germany contracted by 0.6 percent, marking its worst performance since the global financial crisis was raging in 2009.
The downturn marked the currency bloc's first full year in which no quarter produced growth, extending back to 1995. For the year as a whole, GDP fell by 0.5 percent.
Germany is expected to rebound but the figures suggest the bloc as a whole could remain in recession in the first quarter of this year, despite a recent jump in market sentiment as fears that the currency bloc could fall apart have faded.
"The market has weakened because of the GDP numbers," said Barclays commodities analyst Miswin Mahesh. "It's been a macro sell-off this morning with the GDP numbers coming out, rather than any fundamental move in itself. Most asset classes have sold."
"The jobless claims numbers were solid, and with the European market closing, the news out of Europe is pretty much done for the day," Frederick said.
Initial claims for state jobless aid dropped 27,000 to a seasonally adjusted 341,000, the Labor Department said, better than markets had expected.
In Europe, the FTSEurofirst 300 index .FTEU3 of top companies slipped 0.17 percent to close at 1163.59, but the index also pared losses on signs of increased dealmaking.
British fund manager Aberdeen Asset Management (ADN.L) unveiled two acquisitions, of a U.S. fund manager and a majority stake in an international private equity business, to buy its way into new markets. Shares rose 2.5 percent.
"A lot of companies, fearing about the systemic risk, have been delaying investments for a long time," said Gilles Guibout, head of euro zone equities at AXA Investment Managers, which has 554 billion euros ($739 billion) under management.
"But now that this risk is gone, you could well see a sudden catch up in capital expenditures as the companies put their cash to work," Guibout said.
The yen rallied to session highs versus the dollar as investors pared bearish bets on the Japanese currency. The dollar fell as low as 92.92 yen and last traded at 92.85, down 0.56 percent on the day.
The euro fell 0.74 percent to $1.3354.
Oil prices initially fell after euro zone figures curbed expectations of accelerating global growth and higher energy demand. The stronger-than-expected drop in U.S. jobless claims last week helped lift U.S. crude markets, and Brent rebounded to trade slightly above break-even.
Brent crude oil rose 12 cents to settle at $118.00 a barrel. April Brent futures became the front-month contract on Thursday.
U.S. crude rose 30 cents a barrel to settle at $97.31.
U.S. Treasuries yields edged back from 10-month highs on the euro zone data, helping boost demand for safe-haven debt.
The benchmark 10-year U.S. Treasury note was up 17/32 in price to yield 2.9983 percent.
(Additional reporting by Marc Jones in London; Editing by Chizu Nomiyama, Andrew Hay, James Dalgleish and Nick Zieminski)