London/New York: The US stocks fell after Monday’s rebound, while the 10-year treasury yield rose amid data showing a gauge of the US services industries advanced. Copper slid as a non-manufacturing gauge in China retreated.

The Standard & Poor’s 500 Index fell 0.4% at 10:12 am in New York. Treasury rates added three basis points to 2.51%. Bonds from Italy to Portugal fell as Goldman Sachs Group Inc. joined investors saying the narrowing of yield spreads to German bunds is over. A gauge of Chinese shares in Hong Kong slid 0.7%. The dollar gained 0.4% against the euro, while copper dropped 1.1%.

Service industries in the US expanded in July at the fastest pace since December 2005, showing the economy was building more momentum at the start of the second half of 2014. China’s non-manufacturing gauge declined to a record, data from HSBC Holdings Plc and Markit Economics showed before reports on the US service industry and factory orders. European equities rose after results from Bayerische Motoren Werke AG (BMW) and Credit Agricole SA beat analyst estimates.

“You have a lot of continued momentum in this downward trend we’ve seen dating back a couple weeks," Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said in a phone interview. “It doesn’t always resolve itself in one day. Plus you had Chinese data that wasn’t great, which is one specific factor affecting the markets right now."

The S&P 500 gained 0.7% on Monday, rebounding from the worst week since 2012, as Portugal’s bailout of Banco Espirito Santo eased concern about Europe’s most indebted lenders, while earnings from companies including Berkshire Hathaway Inc. beat estimates.

Target, Services

Among stocks moving on Tuesday, Target Corp. lost 3.5% after cutting its estimate for second-quarter profit on an expense stemming from a December data breach. Motorola Solutions Inc. slipped 3.2% as quarterly earnings fell short of estimates.

The pickup among service providers, combined with the strongest rate of growth in more than three years at American factories, shows the world’s largest economy was strengthening at the start of the third quarter. Faster payroll growth is helping fuel consumer demand, raising the odds a self-reinforcing cycle of increased hiring and spending is underway.

Concern has grown that the improving economy may force the Fed to raise interest rates sooner than expected. Data last week showed the US gross domestic product (GDP) expanded at a 4% annual pace in the second quarter, confirming the Fed’s view that a first-quarter contraction was transitory. A separate report on 1 August showed employers in the US added more than 200,000 jobs for a sixth straight month in July, the longest such period since 1997.

China Data

China’s service industries stagnated in July as a private index fell to a record low, suggesting the government’s stimulus measures are failing to gain traction outside manufacturing.

The Shanghai Composite Index slid 0.2% after closing on Monday at the highest level this year. The gauge will probably end its world-beating rally within days and fall about 10%, Tom DeMark the developer of market-timing indicators who predicted the gauge’s peak last year. Selling into strength now is recommended, he wrote in an emailed response to Bloomberg, adding that the losses may occur over six months.

Taiwan’s benchmark stock index lost 2%, the biggest drop since 5 February, and closed at the lowest level in two months. HTC Corp. declined 4.4% after sales dropped.

Europe PMI

Markit Economics said its Purchasing Managers’ Index for the UK services, the biggest part of the economy, strengthened more than economists forecast last month. In the euro area, Markit’s composite of services and manufacturing rose to 53.8 in July from 52.8 in June, less than initially estimated.

Three shares advanced for every two that declined on the Stoxx 600, rebounding from a 3.3% drop in the last four days that dragged the gauge to the lowest close in 15 weeks. The Stoxx 600 is valued at 14 times estimated 12-month earnings, compared with a multiple of 15.3 for the S&P 500.

BMW, the world’s biggest manufacturer of luxury autos, jumped 1.1% after reporting its highest profitability from carmaking in three years. Credit Agricole, which wrote down its holding of bailed-out lender Banco Espirito Santo SA, climbed 3.2% after saying it boosted profit excluding the charge.

Pretty Cheap

“With BMW, earnings have been very good even though sales fell slightly short of expectations," said Pierre Mouton, who helps oversee $8 billion at Notz, Stucki & Cie. in Geneva. “European markets are pretty cheap on average so buying a bit now can be a good investment if you look ahead three to six months."

The European Central Bank (ECB) meets this week after introducing an unprecedented package of stimulus measures in June. With the euro-region economy slowly gathering pace, officials may face little urgency to provide more stimulus any time soon. The ECB will leave the benchmark rate at a record low of 0.15% this week, according to a Bloomberg survey. The decision is due on 7 August.

European bonds fell, with the yield on Italy’s 10-year note rising five basis points to 2.75%, and the rate on similar-maturity Portuguese debt jumping seven basis points to 3.69%.

Bond Spreads

“We do not expect any further compression of spreads," Goldman Sachs strategists Silvia Ardagna and Francesco Garzarelli wrote in an emailed note on Tuesday in London. “We are more concerned about Italy where, over the past few months, economic activity data has continued to surprise on the downside and institutional and structural reforms have not yet been delivered."

Russia’s 10-year bond yield rose five basis points to 9.71% as the government scrapped its third ruble debt sale. The finance ministry pulled Wednesday’s sale, citing unfavorable market conditions in a statement on its website.

Ukraine expressed alarm pn Tuesday about a new buildup of Russian forces on its border as it pursued an offensive against pro-Moscow separatists. The country’s armed forces are pressing ahead after the US and the European Union increased pressure on Russian President Vladimir Putin over his backing for the rebels with an expansion of sanctions.

The Micex Index retreated 1.4%. OAO Aeroflot tumbled to the lowest level since March after Vedomosti reported the government is considering European flight restrictions that may curtail earnings of the nation’s biggest carrier. Bloomberg

Kyoungwha Kim in Singapore, Yoshiaki Nohara and Kevin Buckland in Tokyo, Emma O’Brien in Wellington, Kana Nishizawa and Nick Gentle in Hong Kong and Will Hadfield, Namitha Jagadeesh, Shelley Smith and Claudia Carpenter in London also contributed to this story.