NEW YORK Global equity markets mostly rose on Monday, driven higher by a flurry of merger and acquisition activity, while a recent tumble in the yen against the dollar halted after Japan's economy minister suggested the currency might have weakened enough.
Major American and European stock indices are up double digits - the U.S. benchmark S&P 500 index is almost 17 percent higher so far this year - and investors still see better returns ahead in equities, even as Wall Street closed slightly lower.
Deals such as Yahoo's (YHOO.O) $1.1 billion bid for blogging service Tumblr indicate companies still are seeking to grow through acquisitions despite record high share prices, a bullish sign for stocks. Yahoo rose 0.23 percent to $26.58.
In another deal, generic drugmaker Actavis Inc. ACT.N, itself the subject of takeover speculation, said it would buy specialty pharmaceutical company Warner Chilcott Plc WCRX.O for $5 billion in stock.
Actavis rose 1.32 percent to $127.15, while Warner Chilcott gained 2.03 percent to $19.60.
U.S. stocks fell after modest gains earlier in the session on a day with no economic data and little news or a catalyst to drive prices much in either direction, said Tim Ghriskey, chief investment officer at Solaris Group in Bedford Hills, New York.
"There are people scared by the sharpness and the length of this rally, which is totally understandable, but there are still those who are afraid to not invest and miss the rally," he said.
The Dow Jones industrial average .DJI closed down 19.12 points, or 0.12 percent, at 15,335.28. The Standard & Poor's 500 Index .SPX fell 1.18 points, or 0.07 percent, to 1,666.29. The Nasdaq Composite Index .IXIC shed 2.53 points, or 0.07 percent, at 3,496.43.
Major indices elsewhere mostly rose. MSCI's all-country world equity index .MIWO00000PUS rose 0.43 percent to its highest since June 2008. MSCI's emerging markets index rose 0.25 percent, but Mexico's IPC index .MXX fell 1.74 percent, beaten lower by the weak outlook for the country's leading shares.
European shares hit five-year highs, boosted by strength in German stocks and a travel sector lifted by a surge in Ryanair (RYA.I) after it reported better-than-expected earnings for the past year. Ryanair rose 6.87 percent to a record 6.765 euro.
The Japanese economy minister, Akira Amari, said the yen's excessive strength had largely corrected and further weakness could damage Japan's economy.
Analysts, however, said any sharp dip in the dollar against the yen was a buying opportunity as Tokyo was committed to easier monetary policy. While the dollar fell sharply on Amari's comments and remained down on the day, it was off the session low.
The dollar was last 0.64 percent lower at 102.26 yen, having hit a low of 102.19. Last Friday, the dollar reached a high of 103.30 yen.
The euro gained 0.59 percent against the dollar to 128.886.
Gold gained about 2 percent after a roller coaster session in which it lurched $35 an ounce higher to snap seven consecutive days of losses, with traders citing a wave of pent-up short-covering.
Short sellers buy a borrowed security and immediately sell it in the hope of buying it back at a lower price to pay the lender. When prices are not near the agreed "strike" price, short-sellers are forced to buy, pushing prices higher.
Gold is down 17 percent for the year. Hedge funds and other major commodity speculators pulled $1.4 billion from the U.S. gold futures market in the week to May 14, Reuters calculations of data from the Commodity Futures Trading Commission show.
Spot gold prices rebounded $35.96 on Monday, to $1,394.60 an ounce after slipping to $1,338.95 its weakest since April 16.
The beginning of the end of the Fed's massive bond-buying program might come sooner than many investors think if recent gains in the U.S. labor market do not prove fleeting.
U.S. government debt prices slipped after an early rebound from last week's sell-off as the dollar weakened against the yen. The benchmark 10-year U.S. Treasury note was down 3/32 in price to yield 1.9629 percent.
Brent crude traded near break-even, weighed by ample supplies, weaker demand for fuel and a strong dollar.
Brent crude for July was up 16 cents to settle at $104.80 a barrel. U.S. crude rose 69 cents to settle at $96.71.
(Reporting by Herbert Lash; Editing by Dan Grebler)