* Wall Street stocks rise modestly in subdued trade
* U.S. bond markets shut for Veterans Day
* Gold slides to 3-1/2 week low on low inflation
* Oil rises toward $106 after China data, no Iran deal
NEW YORK, Nov 11 (Reuters) - Wall Street and other major world stock indexes rose modestly on Monday, but with U.S. bond markets and banks closed for the Veterans Day holiday, trading was subdued.
The dollar's rally against the euro paused after two days of strong gains amid continued discussion over when the Federal Reserve might scale back its stimulus, while gold slid to a 3-1/2 week low on low inflation.
Brent crude oil rose to $106 a barrel after Iran and six world powers did not reach a deal on Tehran's nuclear program and after Chinese data pointed to a rise in fuel demand in the world's biggest energy consumer. U.S. light crude was up 15 cents at $94.75.
Signs of a solid U.S. recovery boosted world equity markets despite concerns that the Federal Reserve might reduce its economic stimulus.
Surprisingly strong U.S. jobs data last week coaxed forward some expectations for when the Fed might start tapering its stimulus.
"Markets seem to be waiting for a lot of questions to be answered," said Brian Jacobsen, chief portfolio strategist at Wells Fargo funds Management in Menomonee Falls, Wisconsin. "Some are waiting for the blueprint from the Chinese leadership about reforms to come. Others are waiting to see what policy response GDP and inflation data in Europe will bring from the European Central Bank. And everyone is waiting to see if growth in the United States is fast enough to merit a Fed taper, or if inflation is too low to justify a taper-delay."
In afternoon trade, the Dow Jones industrial average was up 10.73 points, or 0.07 percent, at 15,772.51. The Standard & Poor's 500 Index was up 0.48 points, or 0.03 percent, at 1,771.09. The Nasdaq Composite Index was up 1.30 points, or 0.03 percent, at 3,920.53
Fed officials, including Chairman Ben Bernanke, have sounded cautious about the prospect for early tapering since the jobs data, though many investors are waiting for Bernanke's nominated successor, Janet Yellen, to give her views before the U.S. Senate on Thursday.
A Reuters poll of U.S. primary dealers on Friday showed just one of the 16 respondents expected tapering to begin in December. Six voted for January, and the majority expected tapering to start in March or later.
Meanwhile, expectations for U.S. growth helped lift European shares by 0.3 percent, off one-week lows during a subdued session.
Earlier, the recovery hopes had boosted Japan's Nikkei by a hefty 1.3 percent, lifting it from one-month lows.
MSCI's global barometer of world shares added 0.2 percent, though it was still down 1.7 percent from the near six-year highs touched at the end of October, when it seemed the Fed might not taper until well into next year.
Asian shares reflected the concern in emerging markets that an early cutback in Fed stimulus and higher bond rates would direct capital toward the United States.
MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.5 percent, hitting its lowest since Oct. 11 and extending Friday's 1 percent drop.
Emerging Asian currencies also came under pressure on the capital outflow fears. The Indian rupee fell 1.3 percent to 63.281 per dollar and the Indonesian rupiah was down 1 percent to 11,551 per dollar, a one-month low.
DOLLAR REBOUND STALLS
The dollar paused in its advance against the euro after two days of strong gains, with a further rise seen depending on whether U.S. bond yields keep rising amid an intensifying debate on when the Federal Reserve might scale back its stimulus.
But the U.S. holiday kept many investors on the sidelines and volumes low. While the euro managed to retrace some of its recent losses, analysts cautioned against reading too much into Monday's trading.
"It's a very quiet day with more of a relief bounce" in the euro, said David Song, currency analyst at DailyFX in New York. "The euro could be in line for another move lower from here."
The euro climbed to $1.3412 on lower-than-usual volume, but gains were capped as investors began to sell it from around $1.3400 through to $1.3410.
The euro hit a two-month low of $1.3295 last Thursday after the European Central Bank shocked the market with a surprise cut of its main interest rate to a record low 0.25 percent.
The euro zone currency was last trading up 0.3 percent at $1.3402.
Against the Japanese yen, the dollar gained 0.1 percent to 99.20 yen.
Speculators have cut long euro positions and the trend could gather pace with the euro zone facing a prolonged period of falling inflation. That could lead to the ECB deploying more aggressive monetary easing instruments.
Although the ECB's rate-setting committee was split about Thursday's decision to cut rates, Executive Board member Benoit Coeure said on Saturday that the bank could trim interest rates further and provide more liquidity.
In commodity markets, gold took a hit, sliding to a three-and-a-half week low just under $1,280 an ounce to add to Friday's 1.5 percent decline.