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GLOBAL MARKETS-Equities mixed as political concerns weigh on sentiment

(Updates through midday U.S. trading)

NEW YORK, Sept 11 (Reuters) - Global equities treaded water and U.S. government bonds edged higher on Friday as investors weighed better-than-expected corporate earnings and increased M&A activity in Europe against political concerns ranging from the U.S. elections to Brexit.

Growing fears over a messy no-deal Brexit dragged sterling to new 5-1/2-month lows after the European Union told Britain it should urgently scrap a plan to break their divorce treaty.

“Most of the risks faced by markets for the rest of the year are political, so around the U.S. election, the UK government’s exit from the EU and U.S.-China tensions,” said Francois Savary, chief investment officer at Swiss wealth manager Prime Partners.

“As people take a step back to assess these risks, we’re in this consolidation, holding pattern, which was needed as markets aren’t cheap at the moment.”

MSCI’s gauge of stocks across the globe shed 0.07%% following modest gains in Europe and Asia. Japan’s Nikkei rose after Tokyo dropped its coronavirus alert by one notch from the highest level as COVID-19 cases trend down.

European indexes were bolstered after telecoms and cable group Altice Europe said its founder had offered to take the company private, sending its shares up more than 24% .

In midday trading on Wall Street, the Dow Jones Industrial Average rose 71.56 points, or 0.26%, to 27,606.14, the S&P 500 lost 6.46 points, or 0.19%, to 3,332.73 and the Nasdaq Composite dropped 106.89 points, or 0.98%, to 10,812.71.

Shares of cloud services company Oracle Corp and exercise bike maker Peloton Interactive Co both jumped after better-than-expected earnings but pared most of their gains by midday.

The NYSE Fang+ index of big 10 tech companies has lost 5.4% so far this week - its biggest weekly loss since the market turmoil in March if sustained by the end of Friday.

Still, the index has more than doubled from its March trough, and investors have gathered that high valuations are justifiable in light of near-zero interest rates in much of the developed world and massive liquidity the world’s central banks have created.

Many investors have said the sell-off was a healthy correction.

Yet, with the world’s stocks still trading near the most expensive levels relative to the profit outlook since the 2000 tech bubble, some analysts called for caution.

“Global shares had rallied on expectations of economic recovery from lockdowns. But as the autumn begins (in the northern hemisphere), people wonder if coronavirus infections could worsen,” said Kozo Koide, chief economist at Asset Management One.

In currency markets, the British pound was set for its worst week against the euro and the dollar since mid-March. On Friday it was down 0.1% against the euro at 0.9285 pence and 0.2% to the dollar to $1.2825.

The European Union is ramping up preparations for a tumultuous end to the four-year Brexit saga after Britain explicitly said this week it plans to break international law by breaching parts of the Withdrawal Agreement treaty signed in January.

The dollar index fell 0.044%, with the euro up 0.21% to $1.1838.

Benchmark 10-year notes last rose 5/32 in price to yield 0.6674%, from 0.684% late on on Thursday.

U.S. crude recently rose 0.7% to $37.56 per barrel and Brent was at $40.16, up 0.25% on the day.

Reporting by David Randall Editing by Nick Zieminski and Tom Brown

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