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NEW YORK (Reuters) - Nestle's jump to a record high boosted European stocks and helped buoy a global index on Monday, while the dollar was close to recent lows and the U.S. yield curve flattened after soft capital goods data.
Stocks were volatile on Wall Street, with defensive sectors emerging as the best performers as the S&P 500 eked out a small gain.
A massive trade in gold futures as Europe opened for trading dragged the contract to a six-week low.
European shares rose the most in five sessions as banks rallied after Italy reached a deal to wind up two failed regional lenders. Nestle (NESN.S) jumped 4.3 percent, the most in almost six years, after an activist investor urged changes at the world's largest food company.
The pan-European FTSEurofirst 300 index .FTEU3 rose 0.41 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.13 percent.
Bank stocks .SX7P rose after an agreement in which Italy's largest retail bank, Intesa Sanpaolo (ISP.MI), will take on the remaining good assets of collapsed Popolare di Vicenza and Veneto Banca.
But across the Atlantic, new orders for key U.S.-made capital goods unexpectedly fell in May and shipments also declined, suggesting a loss of momentum in the manufacturing sector halfway through the second quarter.
The Dow Jones Industrial Average .DJI rose 14.79 points, or 0.07 percent, to 21,409.55, the S&P 500 .SPX gained 0.77 points, or 0.03 percent, to 2,439.07 and the Nasdaq Composite .IXIC dropped 18.10 points, or 0.29 percent, to 6,247.15.
Emerging market stocks rose 0.81 percent.
The best performing sectors on the S&P 500 were telecoms and utilities, so-called bond proxies because of their relative higher yield and lower volatility.
"The bond market is signaling an economic slowing," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, pointing to a flatter yield curve.
"That's why you're seeing defensive names (in stocks) like utilities do well because equity investors are buying more in line with what that bond market is saying."
Long-dated U.S. Treasury yields fell after the soft new capital goods orders data. The yield curve has flattened in the past month as Federal Reserve speakers including New York Fed President William Dudley have indicated further monetary policy tightening is likely even as economic data disappoints.
Benchmark 10-year notes US10YT=RR last rose 3/32 in price to yield 2.1352 percent, from 2.144 percent late on Friday.
The yield curve between five-year notes and 30-year bonds US5US30=TWEB fell to 93.1 basis points, the flattest since late 2007. It was last at 93.9 basis points.
The U.S. dollar fell against the euro after the weaker-than-expected data, but buyers came in support of the greenback after it hit a more than one-week low.
The dollar index .DXY rose 0.17 percent, with the euro EUR= down 0.11 percent to $1.118 (0.8789 pounds).
The Japanese yen weakened 0.54 percent versus the greenback at 111.87 per dollar, while sterling GBP= was last trading at $1.2717, up 0.01 percent.
U.S. crude CLcv1 rose 0.93 percent to $43.41 per barrel and Brent LCOcv1 was last at $45.90, up 0.79 percent on the day.
U.S. oil is still set for a near 20 percent drop in the first half of the year.
Investors in U.S. crude futures and options increased their bets against any further rise in prices, as the number of U.S. oil rigs in operation hit its highest in over three years. [CFTC/] [RIG/U]
“U.S. production could jump to 10, maybe 10.5 million barrels a day by the end of the year, and when you add Libya, Nigeria and North Sea production that will negate the Saudi-led cuts," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut. U.S. output has steadily grown to around 9.35 million barrels per day.
The rise in supplies threatens efforts by the Organization of the Petroleum Exporting Countries and its partners to reduce global oil inventories with production cuts.
Gold tumbled to its lowest price in nearly six weeks as a large sell order hit sentiment on Monday, though losses were limited by political uncertainty around the world.
The sale of 1.85 million ounces of gold and 5,000 ounces of silver in a short time was behind the fall in prices, said Afshin Nabavi, head of trading at MKS in Switzerland.
Spot gold XAU= dropped 1.0 percent to $1,243.56 an ounce. U.S. gold futures GCcv1 fell 0.96 percent to $1,244.40 an ounce.
Copper CMCU3 rose 0.02 percent to $5,801.50 a tonne.
Additional reporting by Karen Brettell, Julia Simon and Sam Forgione in New York; Editing by Nick Zieminski