* Wall Street rebounds after news of AES and China
* Dollar falls to lowest level this year versus euro
* Mild profit-taking seen after five-week rally in bonds
* Oil falls, traders eye position limits, China
(Updates with close of U.S. markets)
By Herbert Lash
NEW YORK, Sept 14 (Reuters) - U.S. stocks rose on Monday,
helped by news that China's sovereign wealth fund is eyeing a
stake in U.S. power company AES Corp <AES.N>, while the dollar
fell to a 2009 low against the euro on revived risk appetite.
Oil fell, weighed down by concerns that position limits on
commodities could be tightened, and about a U.S. decision to
impose special duties on Chinese tires. []
The benchmark S&P 500 <.SPX> and the Dow edged higher,
erasing earlier losses sparked by fears that the U.S.-Sino
dispute could escalate into a global trade row.
"It's the whole risk-on, risk-off story back again," said
Jacob Oubina, currency strategist at Forex.com in Bedminster,
New Jersey. "We had risk come off a little bit overnight with
the China-U.S. trade news. Now the S&P is managing to eke out a
rally here and that's keeping the euro supported."
Some traders said the spat was an excuse to take profit
after a sharp run-up in asset prices. U.S. government debt
retreated, pulling benchmark yields up from two-month lows,
after a five-week rally. []
U.S. gold futures finished at moderately lower levels as
investors decided to take profits after a swift run up last
week. But prices held above $1,000 an ounce. []
Shares of AES rose 4.5 percent and the S&P utilities index
<.GSPU> gained 1.6 percent after The Wall Street Journal said
China's sovereign wealth fund was seeking a minority stake,
according to people familiar with matter. []
"M&A activity is definitely starting to heat up. (The AES
news) sparked interest in the whole utility sector," said Owen
Fitzpatrick, head of U.S. Equity Group at Deutsche Bank Private
Wealth Management
The Dow Jones industrial average <> was up 21.39
points, or 0.22 percent, at 9,626.80. The Standard & Poor's 500
Index <.SPX> was up 6.61 points, or 0.63 percent, at 1,049.34.
The Nasdaq Composite Index <> was up 10.88 points, or 0.52
percent, at 2,091.78.
The tire dispute could open the door for a host of trade
complaints against China and raised tension between the two
economic powers ahead of the G20 meeting, pressuring U.S. stock
markets. []
U.S. crude <CLc1>, which has been looking to stocks and
macroeconomic data for signs of a turnaround in the economy and
weak fuel demand, fell 43 cents to settle at $68.86 a barrel.
London Brent crude <LCOc1> traded down 25 cents to settle
at $67.44 a barrel.
The euro was up 0.4 percent on the day at $1.4622,
rebounding from a session low of $1.4514. It climbed as high as
$1.4652, its highest level since December 2008, according to
Reuters data.
"The markets might jump to the conclusion that this is a
protectionist measure but I suspect the markets are just
looking for an excuse to take some profits," said Mike Lenhoff,
strategist at Brewin Dolphin.
"The markets are looking for a breather and it is nothing
more than that. It's just another ordinary day on the market,"
said Lenhoff.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 20/32 to yield 3.42 percent.
John Canavan, market analyst at Stone & McCarthy Research
Associates in Princeton, New Jersey, said the bond market was
"positioned for profit-taking" at the start of the week after
last week's rally.
"The improvement in stocks let the bond market to move in
the direction it was already leaning in," Canavan said.
MSCI's all-country world stock index <.MIWD00000PUS> was
down 0.2 percent, paring earlier losses of almost 1 percent,
but still on track to break a seven-session winning streak that
lifted the index to 11-month highs last week.
MSCI's emerging market index <.MSCIEF> also pared losses,
but was still off 1.0 percent.
December gold <GCZ9> was down $5.30 at the close at
$1,001.10 an ounce in New York.
Japan's Nikkei average <> shed 2.3 percent, while the
MSCI index of Asia-Pacific stocks outside Japan <.MIAPJ0000PUS>
slipped 1.5 percent.
(Reporting by Caroline Valetkevitch, Wanfeng Zhou, Matthew
Robinson and Ellen Freilich in New York and Joanne Frearson in
London; Writing by Herbert Lash; Editing by Diane Craft)
