* Dollar gains against euro, still supported by jobs data
* Wall St sags on profit taking after S&P hits 10-month high
* U.S. Treasuries prices up despite $75 bln auction ahead
By Walter Brandimarte
NEW YORK, Aug 10 (Reuters) - The U.S. dollar rose against
the euro on Monday with sentiment still supported by
stronger-than-expected U.S. jobs data that bolstered world
markets on Friday, but stocks fell as investors sold some
shares to pocket part of the recent gains.
With no major U.S. economic data on tap, investors traded
cautiously before a two-day meeting by the U.S. Federal
Reserve on Tuesday and Wednesday.
Oil futures prices edged lower, but U.S. Treasury debt
prices higher as the stock market's modest sell-off shifted
some money into bonds.
Investors do not expect the Fed to increase interest rates
at this week's meeting, but they are particularly monitoring
the likelihood of a rate rise by the Fed early next year,
after Friday's U.S. unemployment numbers gave more clarity
that the economy is turning around from a deep recession.
"The tone of the market has shifted since the jobs
report." said Mustafa Chowdhury, head of U.S. rates research
with Deutsche Bank in New York.
The U.S. dollar gained 0.4 percent to 79.298 against a
basket of major currencies, according to the U.S. Dollar Index
<.DXY>. The euro <EUR=> was down more than 0.3 percent against
the U.S. currency at $1.4121.
It was the dollar's third consecutive winning session and
the possible break of a recent trading pattern that consisted
in the greenback weakening whenever positive economic data
encouraged investors to increase holdings of higher-yielding
assets abroad.
For stock markets, however, the week started with a "mild
profit-taking day after a very good two months," said Chad
Morganlander, portfolio manager at Stifel, Nicolaus & Co in
Florham Park, New Jersey.
The benchmark MSCI world equity index <.MIWD00000PUS>
declined 0.53 percent, after rising 1.7 percent in the
previous week and 19 percent since the start of the year.
The Dow Jones industrial average <> fell 51.39 points,
or 0.55 percent, to 9,318.68, while the Standard & Poor's 500
Index <.SPX> lost 6.61 points, or 0.65 percent, to 1,003.87.
The Nasdaq Composite Index <> dropped 14.54 points, or
0.73 percent, at 1,985.71.
On Friday, the major U.S. stock indexes closed at their
highest levels in nine to 10 months.
The FTSEurofirst 300 index <> fell 0.6 percent to
close at 944.64 points, dragged lower by shares of automakers
and miners.
Emerging market stocks dipped 0.1 percent, according to a
MSCI benchmark index <.MSCIEF>.
In contrast, U.S. Treasuries rose as the retreat in stock
markets gave investors an opportunity to go bargain hunting
for bonds.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
up 21/32 in price, with the yield at 3.776 percent, down from
3.86 percent late on Friday. The 30-year U.S. Treasury bond
<US30YT=RR> gained more than a full point, up 1-4/32 in price,
with the yield at 4.535 percent, down from 4.612 percent at
Friday's close.
Even though the U.S. Treasury is selling $75 billion in
three-, 10- and 30-year securities this week, other issues
that are maturing, as well as coupon payments, will free up
billions of dollars in cash that could find their way back
into the Treasury market.
Meanwhile, oil prices seesawed between negative and
positive territories, supported by rising heating oil futures.
But some investors are concerned the recent rally might have
been excessive.
In early afternoon trading, U.S. light sweet crude oil
<CLc1> was down 31 cents, or 0.4 percent, at $70.62 per
barrel, after rising as much as $71.57 per barrel earlier.
(Reporting by Walter Brandimarte; Additional reporting by
Richard Leong and Angela Moon in New York; Editing by Jan
Paschal)
