* Commodity stocks retreat as U.S. dollar rises
* U.S. dollar rises as investors trim bearish bets
* Oil falls towards $69 on signs demand still weak
* Bonds rise as lower stocks bolster safety buying
(Updates with U.S. markets activity, changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, Sept 21 (Reuters) - The U.S. dollar rose on
Monday, hurting crude oil and prices of raw materials stocks,
as doubts about the sustainability of the rally in equities in
the past few months unnerved investors.
The MSCI all-country world stock index <.MIWD00000PUS> was
down 0.8 percent.
The U.S. dollar climbed against major currencies, hitting a
near two-week high against the yen, as investors scaled back
massive short positions ahead of this week's Federal Reserve
meeting and before a summit of the leaders from the Group of 20
nations. For details, see: []
Oil prices fell by almost 3.5 percent towards $69 a barrel
on further signs of weak fuel demand, and gold fell to its
lowest in almost a week, weighed by a rallying dollar that
dented the metal's appeal to non-U.S. investors.
[] []
Copper prices slipped to their lowest in more than two
weeks as traders fretted about rising stocks and a firmer
dollar. []
In the absence of key events or major economic data on
Monday, traders took profits on currencies that have rallied
against the U.S. dollar, including the euro, which is up
roughly 2.0 percent so far this month.
"The markets are consolidating and correcting ahead of the
Fed decision this week," said Vassili Serebriakov, currency
strategist at Wells Fargo in New York.
Shortly after 1 p.m. (1700 GMT), the Dow Jones industrial
average <> was down 43.38 points, or 0.44 percent, at
9,776.82. The Standard & Poor's 500 Index <.SPX> was down 4.87
points, or 0.46 percent, at 1,063.43. The Nasdaq Composite
Index <> was up 2.19 points, or 0.10 percent, at
2,135.05.Wall Street:
The Federal Open Market Committee is expected to hold
interest rates unchanged at near zero percent when it meets on
Wednesday.
Traders will watch for any clues about the U.S. central
bank's exit strategy from its program known as quantitative
easing, which is designed to ease credit tightness.
European equity markets closed lower, with banks and miners
retreating in particular, as some investors wondered whether
the strong rally from March lows is close to conclusion.
Stocks that have led the recent recovery were hit hardest,
with miners topping the list of decliners.
The pan-European FTSEurofirst 300 <> fell 0.7 percent
to close at 999.06 points, the first time it closed below 1,000
since last Tuesday.
"The growing sense of optimism left by (Fed Chairman) Ben
Bernanke's comments last week has left many investors worrying
that the top of this recent move higher is close, so today's
profit taking and position posturing may have a worrying
undertone to it," said Jimmy Yates, head of equities at CMC
Markets.
The U.S. dollar earlier rose more than 1.0 percent against
the yen after speculative flows pushed it higher but later it
pared some gains.
Trading was quiet as markets in Japan were shut until
Thursday for holidays, while markets in India, Indonesia,
Singapore, Malaysia and the Philippines were also shut.
"The focus for traders has been on the dollar," said Rick
Meckler, the president of LibertyView Capital Management in New
York. "To the extent it rallies, they're using it as a reason
to take profits."
The euro <EUR=> slipped 0.3 percent to $1.4673, easing from
$1.4766 hit late last week, which was its strongest since
September 2008.
Against a currency basket <.DXY>, the ICE Futures dollar
index rose to 77.108, its highest level since Sept. 10. The
index was last at 76.78, up 0.5 percent on the day.
U.S. Treasury debt prices rose as a weaker stock market
shored up the safe-haven appeal of government debt ahead of the
Fed's two-day policy meeting, which begins on Tuesday.
[]
Benchmark 10-year Treasury notes <US10YT=RR> traded 7/32
higher in price to yield 3.44 percent,
Oil prices have more than doubled since hitting lows near
$30 a barrel at the height of the global economic crisis, but
the market has come under pressure since touching a year high
of $75 a barrel almost a month ago.
U.S. crude for October delivery fell $2.99 to $69.05 a
barrel by 1709 GMT. London Brent crude <LCOc1> fell $3.22 to
$68.10 a barrel.
Spot gold <XAU=> stood at $1,001.90 an ounce in New York.
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> dipped 0.3 percent, after surging 80 percent
since mid-March when global markets started to rally on hopes
that the financial crisis had bottomed out.
(Reporting by Ryan Vlastelica, Gertrude Chavez-Dreyfuss, Chris
Reese in New York; David Sheppard, David Brett and Simon Falush
in London; writing by Herbert Lash)
