* Euro falls to all-time lows versus Swiss franc
* Oil slips after stocks reverse course and turn lower
* Bonds rise on safety bid before Federal Reserve purchase
(Updates with U.S. markets open; adds byline, changes
dateline)
By Herbert Lash and Natsuko Waki
NEW YORK/LONDON, Dec 20 (Reuters) - World stocks pared
gains to trade slightly lower on Monday while the euro fell
broadly on concerns over the euro zone debt crisis.
Government bond prices on both sides of the Atlantic rose
on safe-haven demand spurred by worries over the fiscal shocks
in Europe and heightened tension between North and South Korea.
For details see [] []
North Korea said it would not react to "reckless" military
drills by the South despite an earlier threat to retaliate, and
CNN reported that Pyongyang had agreed to the return of nuclear
inspectors. []
The euro slid to a two-week low versus the U.S. currency
and record lows against the Swiss franc and Australian dollar
as traders fretted over Europe's debt woes. Moody's five-notch
downgrade of Ireland's credit rating last week also weighed.
"Officials' inability to get ahead of the curve in dealing
with the continent's debt crisis remains a key liability for
the euro, and likely one that will keep it vulnerable well into
2011," said Omer Esiner, chief market analyst at Commonwealth
Foreign Exchange in Washington.
The euro remained under pressure after EU leaders last week
failed to produce a permanent financial safety net for the
region's weaker economies.
The euro <EURCHF=EBS> fell to 1.2678 Swiss francs on EBS
trading platform, its weakest since the euro's launch in 1999.
The Swiss currency was helped by safe-haven buying.
The euro <EUR=> was down 0.50 percent at $1.3114 against
the dollar, which was up against a basket of major currencies.
The U.S. Dollar Index <.DXY> up 0.35 percent at 80.655.
Against the Japanese yen, the dollar <JPY=> was down 0.31
percent at 83.69.
The flight to safety pushed gold up for a second day, as
the metal overcame weakness in the euro after a warning from
the European Central Bank on the region's finances encouraged
light safe-haven flows into bullion.
Spot gold prices <XAU=> rose $2.79 to $1,377.40 an ounce.
U.S. stock indexes turned negative in early trading,
weighed by declines in the information technology sector, while
crude prices also edged lower. []
The Dow Jones industrial average <> was down 22.56
points, or 0.20 percent, at 11,469.35. The Standard & Poor's
500 Index <.SPX> was down 0.40 point, or 0.03 percent, at
1,243.51. The Nasdaq Composite Index <> was down 5.43
points, or 0.21 percent, at 2,637.54.
Weaker equities provided pressure on oil prices as the
front-month January crude contract approached expiration.
U.S. light sweet crude oil <CLc1> fell 55 cents to $87.47
per barrel.
Government debt rose. Benchmark 10-year notes <US10YT=RR>
last traded up 16/32 in price to yield 3.27 percent.
(Reporting by Richard Leong, Edward Krudy in New York; William
James and Naomi Tajitsu in London; Blaise Robinson in Paris;
Writing by Herbert Lash; Editing by Kenneth Barry)
