* Crude falls, Goldman Sachs advises taking profits
* US stocks off; Alcoa to report after market's close
* Rate expectations send Bund yield above 3.5 percent
* Dollar up vs euro after U.S. government shutdown avoided
(Adds comment, updates prices)
By Wanfeng Zhou
NEW YORK, April 11 (Reuters) - Crude oil prices fell
sharply on Monday after surging last week as investors warily
eyed efforts to halt Libya's conflict, while the dollar rose
against the euro after the U.S. government averted a potential
shutdown.
U.S. stocks pared early gains to trade down slightly, with
investors nervously awaiting companies' quarterly results to
see if earnings would be strong enough to spark further gains
in equities.
Aluminum maker Alcoa <AA.N> will mark the unofficial start
of the quarterly earnings season when it reports results after
the market's close. Profits at S&P 500 companies are seen
rising 11.4 percent from a year ago, according to Thomson
Reuters data. See []
"There's a question of whether companies can meet the
fairly optimistic expectations," said John Carey, portfolio
manager at Pioneer Investment Management in Boston, which has
about $260 billion in assets under management. "There's
potential for disappointment, but if they come in line or
above, the market could experience a continued rally."
The Dow Jones industrial average <> was down 18.99
points, or 0.15 percent, at 12,361.06. The Standard & Poor's
500 Index <.SPX> fell 6.11 points, or 0.46 percent, at
1,322.06. The Nasdaq Composite Index <> lost 16.53 points,
or 0.59 percent, at 2,763.89.
ICE Brent crude for May <LCOc1> was last down $2.06 at
$124.59 a barrel. U.S. crude for May delivery <CLc1> fell $2.39
cents to $110.39 a barrel. U.S. crude fell further after
long-term commodity bull Goldman Sachs <GS.N> recommended
clients take profits after recent 30-month highs.
The African Union said Muammar Gaddafi had accepted a road
map to end the civil war, but forces loyal to him shelled the
town of Misrata. A broker said oil also fell on profit-taking.
For details, see []
Analysts were skeptical about the peace deal, and even if
an end to the civil war were in sight, it will be some time
before Libyan exports return to pre-conflict levels.
"Some of Libya's oil fields, which have recently come under
attack, have suffered severe damage, which is likely to have a
long-lasting negative impact on the country's production
profile," said Amrita Sen at Barclays Capital. "We don't
believe there is reason to be optimistic even if Gaddafi were
to step down, as the power vacuum would be very large."
World stocks as measured by MSCI <.MIWD00000PUS> were down
0.3 percent, with emerging markets <.MSCIEF> off 0.6 percent.
European stocks fell, with the FTSEurofirst 300 <> index
of top European shares down 0.2 percent.
Although the world economy is fairly robust, investors
increasingly expect higher commodity prices to drive up
inflation, prompting central banks to tighten monetary policy.
The International Monetary Fund said on Monday it did not
believe that rising commodity prices will derail the global
economic recovery but warned that inflation will remain
elevated for a while.
GREENBACK'S GAINS LIMITED
The dollar rose against the euro after the U.S. Congress on
Friday reached a last-minute budget deal that avoided a
government shutdown, though traders said the focus on the U.S.
debt ceiling debate could limit any gains.
A rebound in the dollar was also overdue after it fell
against the euro over the past four months. For the month of
April, the dollar was still down about 2 percent.
The euro <EUR=> fell 0.3 percent to $1.4433, after hitting
a 15-month high around $1.4486 on Friday.
"The euro's drop today is nothing more than white noise and
the pullback should prove shallow," said Jessica Hoversen,
foreign exchange and fixed income analyst at MF Global in New
York.
Hoversen said the dollar's negative tone should remain in
place as long as the U.S. Federal Reserve keeps interest rates
low and while central banks abroad, namely the European Central
Bank and Bank of England, move closer to more normal borrowing
costs.
Expectations of another rise in European Central Bank
interest rates by July kept the euro close to recent highs and
pushed euro zone government bond prices lower. German Bund
yields <DE10YT=TWEB> briefly rose above 3.5 percent for the
first time since August 2009.
The yen was off an 11-month low against the euro and a
2-1/2-year trough versus the Australian dollar as another
earthquake in Japan led some investors to close riskier bets
funded by cheap borrowing in the Japanese currency.
[]
(Additional reporting by Ryan Vlastelica, Julie Haviv and
Gertrude Chavez-Dreyfuss, Gene Ramos and Robert Gibbons;
Editing by Dan Grebler)
