U.S. stocks pare gains

By Herbert Lash

NEW YORK (Reuters) - U.S. stocks pared solid gains to close little changed on Monday after a jump in crude oil raised fears about corporate profits and curbed enthusiasm that a potential capital infusion at the largest U.S. thrift may mean the worst of a worldwide credit crisis is over.

Gold futures rallied to a one-week high as rising crude prices stirred inflation fears, while the dollar rose.

U.S. Treasury debt prices slid as a perceived ebbing of the credit crisis that has battered financial markets for months cut demand for low-risk investments.

Many investors shifted their focus away from the recovering financial sector to the first-quarter earnings reporting period, which begins in earnest after the close with the release of Alcoa Inc (AA.N) results.

Speculation that the U.S. recession will be mild, the credit crisis is winding down and third-quarter earnings will be great was tested on Monday, the first day of the first-quarter reporting season.

"Those assumptions will face a reality check as companies report first-quarter earnings over coming weeks, beginning tonight with Alcoa, and as you get second-quarter guidance," said Jim Awad, chairman of W.P. Stewart & Co. Ltd. in New York.

"It's likely that the Fed created a bottom but that doesn't mean we're off to the races. There will probably be more pain to come," he said.

Alcoa (AA.N) shares were the biggest drag on the Dow, falling 4 percent and contributing more than double that of any other component of the 30-share index.