Global stocks dip amid caution over data Monday 21:05 GMT. Global equities started the first full trading week of 2014 on a subdued note, as investors digested the latest reports on global service sector activity and looked ahead to central bank meetings in Europe and jobs figures from the US later this week. In New York, the S&P 500 equity index reversed a modest initial advance to close 0.3 per cent lower, while in Europe the FTSE Eurofirst 300 ended a choppy session with a loss of 0.2 per cent. In Tokyo, the Nikkei 225 tumbled 2.4 per cent as Japanese markets reopened after an extended holiday break. Morgan Stanley's FX strategy team said they expected the focus this week to fall on three main areas, which they believed would drive markets this year. First, we will be watching China, where tightening financial conditions as the country rebalances could weigh on growth in the near term, pressuring risk appetite. "Second, we will watch data out of the US, where the "good is bad" thesis could still hold. Third, we will watch the dynamics in the euro area, where the European Central Bank faces disinflationary risks. There was some disappointment on Monday regarding the first two of those areas. The HSBC-Markit Chinese service sector purchasing managers" index for December came in at its lowest since August 2011. The figures came hard on the heels of last week's disappointing Chinese manufacturing data, plus a recent spike in Shanghai money market rates. "The authorities in China have managed to put a lid on dramatic recent signs of interbank stress, but it's hard to put a lid on worries over how China will navigate its tough and historic transition away from its old growth model," said John Hardy, head of FX strategy at Saxo Bank. The Shanghai Composite share index fell 1.8 per cent to its lowest in five months. In the US, meanwhile, the Institute for Supply Management's non-manufacturing index slipped to 53.0 last month from 53.9 in November, as the new orders component fell sharply to its lowest level since May 2009. Analysts were broadly sanguine about the outlook for the US, however. "We rule out that today's outcome represents the beginning of a negative trend as the state of the US economy is much more solid than in 2009 and today's print is seen as a one-off decline that is likely to be corrected near term," said Annalisa Piazza at Newedge Strategy. Indeed, the focus for many observers - ahead of the release of the December non-farm payrolls report on Friday - was a solid rise in the employment sub-index of the ISM survey. "The emphasis on the labour market data as an input for Federal Reserve policy means the weaker headline [ISM] is arguably offset by the employment data, so do not expect significant negative dollar follow through versus the euro," said Alan Ruskin, strategist at Deutsche Bank. The single currency was up 0.3 per cent against the dollar at $1.3634, only slightly up from levels seen before the ISM data came out. The dollar was also down 0.6 per cent against the yen at Y104.19, as the US unit paused for breath after its firm start to 2014. The softer dollar helped gold extend its recent rally, albeit by just $1 to $1,237 an ounce. Some observers say the euro's resilience against the dollar during 2013 could be a key determinant of ECB policy this year, although few expect much action at this week's meeting of the central bank. "As long as growth and inflation in the eurozone remain in line with expectations, the ECB is likely to keep its powder dry," said Carsten Brzeski, senior economist at ING. However, the determination to fight any deflationary tendencies has never been higher than now. At its current level, the stronger euro exchange rate would shave another 0.1 percentage points off the ECB's inflation projections from December, raising deflationary fears. The disappointing headline reading of the US ISM report helped attract buyers in the main government bond markets, analysts said. The yield on the benchmark 10-year Treasury was down 3 basis points at 2.96 per cent, while that on the equivalent duration German Bund fell 3bp to 1.91 per cent. In industrial commodities , concerns about slowing demand from China helped pull the price of copper back from last week's seven-month high. Brent crude steadied after last week's hefty falls to settle $106.73 a barrel, down 16 cents.