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Traders work on the floor of the New York Stock Exchange in this file photo.The Associated Press

Stocks retreated slightly Wednesday, rebounding from steeper declines earlier in the day as investors reacted to rising European bond yields and disappointing U.S. pending home sales.

The S&P 500 closed at 1,562.85, down 0.92 point or less than 0.1 per cent, after falling as low as 1,552 near the start of trading. The benchmark index has been flirting with a record-high close, set in 2007, for about two weeks, without going over the threshold of 1,565.15.

The blue-chip Dow Jones industrial average closed at 14,526.16, down 33.49 points or 0.2 per cent, recovering from a 120-point dip earlier.

In Canada, the S&P/TSX composite index closed at 12,699.58, down 6.80 points or less than 0.1 per cent.

Bloomberg News reported that European governments are vowing that the unusual bailout used in Cyprus will not serve as a template for future financial rescues, despite what the Dutch finance minister said earlier in the week.

Yet, bond yields of financially unstable euro zone countries reflected concern – especially with the leader of Italy's Democratic Party ruling out the possibility of forming a coalition government, adding political instability into the mix.

The yield on the Italian 10-year government bond surged nearly 21 basis points, to 4.77 per cent. Yields on Portuguese and Spanish government bonds also rose.

Investors turned to U.S. Treasury bonds for safety. The yield on the 10-year bond fell 6.6 basis points, to about 1.85 per cent – its lowest level since the start of March.

U.S. pending home sales in February rose just 5 per cent over last year, disappointing expectations for a gain of 8.7 per cent. However, observers noted that unsold inventory of homes have fallen to decade lows, suggesting that the lack of activity could be due to fewer-than-usual buying opportunities.

Dollar General Corp. fell 2.5 per cent after announcing it will sell 30 million shares in a secondary offering.

Cliffs Natural Resources Inc. fell 13.8 per cent after analysts warned that the iron ore producer will face lower commodity prices with the arrival of new supply.

Research In Motion Ltd. rose 0.9 per cent ahead of its earnings report on Thursday morning. The stock has attracted a record-high number of short-sellers as the share price has doubled from its recent low: Shares-on-loan have risen to about 30 per cent, according to Markit.

Among commodities, crude oil rose to $96.50 (U.S.) a barrel, up 16 cents, touching its highest level since mid-February. Gold rose to $1,604.80, up $9.10.

Among Canadian commodity producers, Suncor Energy Inc. fell 1.1 per cent. Barrick Gold Corp. rose 2 per cent.

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