NEW YORK (Reuters) - The dollar hit an eight-and-a-half-month high against major currencies Monday as the prospect of further European Central Bank stimulus dragged the euro down to its weakest since mid-April, while oil prices retreated.
Global stock markets were mixed, with Wall Street falling ahead of a crucial payroll report Friday, while European shares rose. Still, the three major U.S. indexes were set to end the month higher for a second straight month.
The jobs report is arguably the most important U.S. economic indicator due out before the Federal Reserve decides on Dec. 16 whether or not to raise interest rates for the first time in nearly a decade.
“The market has largely priced in a December hike and it would have to take a pretty significant miss with the jobs report to give the Fed some pause before its next meeting,” said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin.
The Dow Jones industrial average fell 49.9 points, or 0.28 percent, to 17,748.59, the S&P 500 lost 6.37 points, or 0.3 percent, to 2,083.74 and the Nasdaq Composite dropped 16.24 points, or 0.32 percent, to 5,111.28.
The week is expected to highlight the divergent economic policies in the United States and the euro zone, which may set the tone for markets early next year.
European shares were lifted by the prospect of the ECB unveiling an extension of its bond-buying programme at a Thursday meeting. The pan-European FTSEurofirst 300 index rose 0.4 percent for a 2.3-percent monthly gain.
The dollar index, which measures the greenback against a basket of major currencies, was up 0.16 percent despite disappointing data on U.S. business sentiment and pending home sales. It hit its highest point since mid-March and was set for its biggest monthly rise since January.
“The market’s really kind of looking through the numbers that are coming out right now and more looking towards the end of the week and central bank discussions,” said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
The euro fell 0.2 percent against the dollar to its lowest point since April.
The MSCI index of world stocks was off 0.4 percent and on track for a 0.9 percent decline for November.
Brent futures were lower and U.S. crude gave back earlier gains on Monday as a pre-OPEC-meeting rally and run-up in U.S. refined oil products faltered.
U.S. crude futures settled down 6 cents, at $41.65. Brent crude, the global benchmark ended down 25 cents, at $44.61 per barrel.
Gold, on track for its worst month since June 2013, traded up 0.7 percent at $1,065.86 an ounce.
U.S. Treasuries prices rose modestly Monday on hesitation ahead of speeches from top Federal Reserve speakers throughout the week. Benchmark 10-year Treasuries rose 2/32 in price to yield 2.221 percent, down from 2.222 on late Friday. The 30-year bond was up 6/32 in price to yield 2.99 percent.
Additional reporting by Dion Rabouin and Tariro Mzezewa in New York, Tanya Agrawal in Bengaluru, Nigel Stephenson in London; Editing by Bernadette Baum and Nick Zieminski