* U.S. stocks weighed by Fed's move
* Dollar up vs euro on Greece's uncertainty
* European shares dip on drug recall.
(Updates with open of U.S. markets, changes byline,
dateline, previous: LONDON)
By Manuela Badawy
NEW YORK, Feb 22 (Reuters) - U.S. stocks faltered and the
U.S. dollar rose against the euro on Monday as investors
worried about the sustainability of the economic recovery in
the wake of last week's discount rate rise by the Federal
Reserve.
Concern about Greece's indebtedness weighed on the euro and
supported the dollar as well.
U.S. Treasury bonds fell in early New York trade as traders
prepared for an $8 billion auction of 30-year TIPS inflation
protected bonds later in the day.
The Dow Jones industrial average <> was up 2.19 points,
or 0.02 percent, at 10,404.54. The Standard & Poor's 500 Index
<.SPX> was down 0.54 points, or 0.05 percent, at 1,108.63. The
Nasdaq Composite Index <> was up 0.56 points, or 0.02
percent, at 2,244.39.
"Stocks have started to soften up and obviously the euro is
still facing serious headwinds with regard to Greece," said
Brian Dolan, chief strategist at Forex.com in Bedminster, New
Jersey.
Overall world stocks hit 2-1/2 week highs on Monday but
European shares dipped slightly with GlaxoSmithKline <GSK.L>
hit by calls for a key drug to be withdrawn on safety grounds.
MSCI's world equity index <.MIWD00000PUS> rose 0.57 percent
while the FTSEurofirst 300 index <> lost 0.19 percent.
The index is down 2.0 percent in 2010, partly on worries that
China's moves to slow its economy and a potential Greek debt
default may slow world economic growth.
Emerging market stocks <.MSCIEF> rose 1.15 percent, while
Shanghai stocks <> finished the first trading day lower
after a week-long break for the lunar new year holiday, as
concerns persisted about further tightening in China's monetary
policy.
The U.S. dollar was down against major currencies as
measured by the ICE Futures Exchange's dollar index <.DXY>
which was 0.09 percent at 80.580.
The euro <EUR=> was down 0.18 percent at $1.3592 as
lingering worries about Greece's public finances capped its
gains, while the dollar <JPY=> was down 0.45 percent against
the yet at 91.17.
Earlier in the trading day the euro was firmer against the
dollar after Der Spiegel reported on Saturday that Germany's
finance ministry had prepared a bail-out plan for Greece under
which countries using the euro would provide aid worth between
20-25 billion euros.
The U.S. dollar rallied last week after the Federal Reserve
raised the discount rate that banks are charged for emergency
loans. The timing of the move was a surprise, and investors
took it as the beginning of the end of an easy money regime
that has weighed heavily on the greenback.
Policy-makers quickly sought to dispel that notion, though,
saying the benchmark federal funds rate, which is the Fed's
main monetary policy tool, will remain low for some time.
Fed Chairman Ben Bernanke is expected to issue similar
reassurances in testimony before Congress later this week.
(Additional reporting by Steven C. Johnson)
