* Wall Street stocks rise modestly in subdued trade
* U.S. bond markets shut for Veterans Day
* Gold slides to 3-1/2 week low amid low inflation
* Oil rises toward $106 after China data, no Iran deal
By Ellen Freilich
NEW YORK, Nov 11 U.S. stocks rose modestly on
Monday, extending a five-week rally, but with U.S. bond markets
and banks closed for the Veterans Day holiday, trading was
The dollar's rally 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
amid 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.
Signs of a solid U.S. recovery boosted world equity markets
despite concerns that the Federal Reserve might reduce its
Surprisingly strong U.S. jobs data last week pushed forward
expectations for when the Fed could start tapering its stimulus,
lifting Treasury bond yields and the dollar on Friday, without
curtailing demand for shares on Wall Street or in other major
On Monday, the Dow Jones industrial average was up
18.75 points, or 0.12 percent, at 15,780.53. The Standard &
Poor's 500 Index was up 0.27 points, or 0.02 percent, at
1,770.88. The Nasdaq Composite Index was down 7.51
points, or 0.19 percent, at 3,911.73.
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.
Meanwhile, expectations for U.S. growth helped lift European
shares by 0.3 percent and off one-week lows during a
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's rally paused on Monday after two days of strong
gains, with further gains seen depending on whether U.S. bond
yields keep rising amid intensifying debate on when the Federal
Reserve will scale back its stimulus.
The euro has struggled as the Fed and the European Central
Bank's diverging monetary policy paths prompt investors to sell
the currency at higher levels.
But the U.S. holiday kept many investors on the sidelines,
and with volume low, the euro managed some recovery, though
analysts cautioned against reading too much into Monday's
"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 $1.3406 on lower-than-usual
volume but gains were capped as investors began to
sell it near $1.3400. The euro hit a two-month low of $1.3295
last Thursday after the ECB surprised the market by cutting its
main interest rate to a record low 0.25 percent.
The dollar index fell 0.2 percent to 81.108, having
set a two-month high of 81.482 on Friday after a report showed
U.S. employers added 204,000 new jobs last month, much more than
the 125,000 new jobs expected.
Still, 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.
SELL THE EURO
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.