* U.S. stocks gain in choppy trade, rising dollar weighs
* Euro breaks below $1.43 for first time since September
* Oil rises above $73 a barrel on news of Iran-Iraq row
* Bonds fall on profit-taking after Thursday's rally
(Updates with U.S. markets close)
By Herbert Lash
NEW YORK, Dec 18 (Reuters) - The U.S. dollar gained broadly
on Friday on improved economic sentiment and a safe-haven bid
after Iranian soldiers crossed into Iraq and took up positions
in a disputed southern oilfield, which also lifted oil prices.
The euro fell below $1.43 for the first time since early
September, flushing out short dollar trades, while the dollar
rose for a fourth consecutive day against the Japanese yen. For
details, see []
The dollar's advance led investors to pare risky bets
earlier in the session, but U.S. stocks ended higher and
trimmed the U.S. currency's gains.
Oil rose above $73 a barrel after Iran's incursion into an
Iraqi oilfield sparked tension between two major crude
exporters. []
A cold snap in the U.S. Northeast, the biggest heating oil
market in the world, also helped support prices.
Dollar strength forced investors who had bet on further
weakness in the greenback to cover their short positions by
selling equities or other assets.
"A strengthening dollar ... means, in my opinion, a rotation
into quality," said Haag Sherman, co-founder and chief
investment officer for Salient Partners, a Houston-based
investment firm with $8 billion in client assets.
Trading was choppy as Friday marked the expiration of
December options and futures.
The Dow Jones industrial average <> closed up 20.63
points, or 0.20 percent, at 10,328.89. The Standard & Poor's
500 Index <.SPX> was up 6.31 points, or 0.58 percent, at
1,102.39. The Nasdaq Composite Index <> was up 31.64
points, or 1.45 percent, at 2,211.69.
The Nasdaq rose on upbeat results from Oracle <ORCL.O> and
Research In Motion <RIM.TO> <RIMM.O> boosted optimism about
technology spending. []
Oracle shares rose 6.4 percent, while RIM's Nasdaq-traded
shares jumped 10.3 percent.
The dollar was up against a basket of major currencies,
with the U.S. Dollar Index <.DXY> up 0.06 percent at 77.741.
The euro <EUR=> was down 0.03 percent at $1.434. Against
the yen, the dollar <JPY=> was up 0.55 percent at 90.37.
"I think we're seeing a continued flight to safety," said
Tom Schrader, managing director of U.S. equity trading at
Stifel Nicolaus Capital Markets in Baltimore.
"The stronger the dollar gets it means investors will be
unwinding the dollar carry trade and that's going to put upward
pressure on the dollar and downward pressure on the stocks."
U.S. Treasury debt prices fell as profit-taking emerged
after a safe-haven rally in bond markets on Thursday that was
ignited by falling stocks and concerns about Greece's fiscal
problems. []
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 16/32 in price to yield 3.54 percent.
At the end of the year investors are trying to position
themselves for 2010, said Jerry Webman, chief economist at
Oppenheimer Funds in New York.
"Everybody is trying to ask if there really is some of sort
of synchronized global recovery, the answer to which I think is
'yes,' Webman said.
U.S. crude for January delivery <CLc1> -- which expires on
Monday -- settled up 71 cents a barrel to $73.36. Barrels for
February delivery, which were more heavily traded, settled up a
modest 34 cents a barrel.
London Brent crude <LCOc1> rose by 38 cents to $73.75 a
barrel.
Signs of improvement in the U.S. economy have helped the
dollar in recent days, as did the Federal Reserve's pledge this
week to wind down most stimulus measures by February, lifting
hopes of a more robust U.S. recovery in 2010.
The dollar and Swiss franc also attracted safe-haven flows
due to Iran-Iraq tensions.
Traders said all these factors encouraged a bout of
position squaring, with investors buying back the dollar and
taking profits on trades that had helped push the U.S. currency
down more than 15 percent between March and November <.DXY>.
"There's a winding down of activity into year end, with
people taking profits on core trades," said Samarjit Shankar,
managing director of global FX strategy at BNY Mellon in
Boston. "But the dollar has been well-supported lately, and
given the positive surprises in U.S. data lately, people are
looking at the U.S. recovery story now as a glass half full."
Spot gold prices <XAU=> rose $14.15 to $1112.00 an ounce.
European shares closed lower, with banks falling as ongoing
concerns about tough new Basel regulations weighed. The
FTSEurofirst 300 <> index of leading European shares
closed 0.5 percent lower at 1,013.15.
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS>, which has rallied more than 60 percent this
year, was 0.5 percent lower. In Japan, the Nikkei share index
<> dipped 0.2 percent, paring most of the day's losses.
(Reporting by Ellis Mnyandu, Joshua Schneyer, Steven S.
Johnson and Richard Leong in New York; Joe Brock and Joanne
Frearson in London; writing by Herbert Lash; Editing by Kenneth
Barry)
