* Stocks decline as dollar reverses course
* Euro slips on renewed regional debt concern
* Gold hits high, then levels off
(Updates with U.S. markets' opening)
By Al Yoon
NEW YORK, Nov 8 (Reuters) - Stocks fell on Monday as
renewed concerns about heavy European debts boosted the dollar,
hurting commodities and tempering the outlook for equities
after a two-month rally.
World stocks as measured by MSCI <.MIWD00000PUS> fell 0.4
percent after rising last week to levels last reached prior to
the collapse of Lehman Brothers.
On Wall Street, stocks maintained an inverse relationship
with the dollar, which had slumped to a 9-1/2 month low against
the euro on expectations the Federal Reserve would buy more
U.S. debt and fuel inflation. Worry about extensive Fed easing
was tempered on Friday by a strong U.S. jobs report for
October.
Some of the euro's fall against the dollar reflected
renewed concern about some euro zone peripheral economies.
Newspaper reports raising fresh doubts about Ireland's
ability to fund itself internationally have weighed on the euro
and caused spreads between Irish and German government bond
yields to widen.
"We're finally seeing the market turn its gaze away from
Fed easing and toward these ongoing problems in peripheral
Europe," said Matthew Strauss, senior strategist at RBC Capital
Markets in Toronto.
"Even before the Fed meeting, spreads for Ireland, Greece,
Portugal were widening, and now that the Fed has indicated what
it will do, the market is starting to trade on these worries."
The Dow Jones industrial average <> fell 58.05 points,
or 0.51 percent, to 11,386.03. The Standard & Poor's 500 Index
<.SPX> declined 5.10 points, or 0.42 percent, to 1,220.75 and
the Nasdaq Composite Index <> slipped 0.66 points to
2,578.32.
Financial stocks were among the biggest losers. The S&P
financial index <.GSPF> declined 0.7 percent, weighed down by a
1.5 percent decline in shares of Wells Fargo & Co <WFC.N> and a
1.9 percent drop in State Street Corp <STT.N>.
The FTSEurofirst 300 <> index of top European shares
declined 0.1 percent as investors cashed in on six-month high
prices reached on Friday.
"Some degree of profit-taking doesn't come as a surprise
after a gain of about 15 percent since late August. The market
might lack a little bit of direction for the first day or two
of the week," said Keith Bowman, analyst at Hargreaves
Lansdown.
Metals prices slipped as the dollar rose, while oil futures
<CLc1> fell 0.6 percent toward $86 a barrel, easing from
two-year highs earlier in the session. Gold <XAU=> slipped for
the first time in three sessions -- falling $1.20 to $1,392.20
-- but remained near its record high of $1398.35 hit earlier in
the day.
Shares of Alcoa Inc <AA.N>, the largest U.S. aluminum
producer, fell 1.1 percent to $13.85, while Exxon Mobil Corp
<XOM.N> dipped 0.3 percent to $69.76.
The dollar has been weakening as a result of the Fed's
pledge to purchase $600 billion in U.S. Treasury securities, a
form of money-printing stimulus known as quantitative easing.
On Monday, however, the U.S. currency was up 0.69 percent
against major currencies <.DXY>, recouping recent losses
following the stronger-than-expected U.S jobs data.
The euro was notably weak, down 0.9 percent at $1.3908
<EUR=>. Against the Japanese yen, the dollar <JPY=> was down
0.09 percent at 81.18 yen.
Government debt was mixed, with benchmark 10-year U.S.
Treasury yields falling 0.02 percentage point to 2.52 percent.
Shorter-term yields edged higher ahead of the Treasury's $32
billion three-year note auction.
In other stock markets, the Athens bourse's banking index
<.FTATBNK> jumped 3.4 percent after results of local elections
ruled out a snap general election in the economically strapped
euro zone country.
The Nikkei average <> climbed 1.1 percent to a
three-month closing high.
(Additional reporting by Steven C. Johnson and Edward Krudy in
New York and Tamawa Desai, Atul Prakash and European Investment
Correspondent Jeremy Gaunt in London; Editing by Kenneth
Barry)
