The U.S. dollar and gold gained on Monday as signs of economic recovery pointed to the likelihood of looming cuts in central bank stimulus, while global equity markets were mostly flat.
Chinese shares rose more than 2 percent on news that factory output grew in July at its fastest pace so far this year, the latest sign suggesting the world's second-largest economy may be stabilizing after more than two years of slumping growth.
Mining stocks rose on the China data. In London, an index .SXPP of heavyweight basic resources stocks rose 1.2 percent, while the Hang Seng Index .HSI closed 2.1 percent higher and the CSI300 .CSI300 index of leading Shanghai and Shenzhen shares advanced 2.9 percent.
The dollar gained on rising expectations that strong U.S. data will prompt the Federal Reserve to act sooner rather than later to trim its monthly purchase of about $85 billion in bonds. The next test of this view will be Tuesday's retail sales reading, which most expect to be strong. <ECI/US>
Gold hit its highest level in nearly three weeks in thin trade, and the world's biggest gold exchange-traded fund, SPDR Gold Trust, recorded its first inflow in two months on Friday, growing by 0.2 percent to 911.13 tonnes.
Spot gold rose as much as 2.2 percent to $1,343.06 an ounce, its highest since July 24. It was last at $1,335.85. U.S. Comex gold futures for December settled up $22 at $1,334.20 an ounce in thin trade.
Several Fed officials have said the central bank could move as early as September if the U.S. economy continues to improve. But many investors fear slower growth without the Fed's support, which has helped fuel a nearly 19 percent gain in the benchmark S&P 500 index so far this year.
Other investors believe the equity market's recent stall is nothing more than a pause in the rally. Hedging activity picked up last week in the options market as traders braced for a short-term decline in equities, according to Credit Suisse.
"While we're seeing increased near-term hedging going into September's FOMC meeting, the option market is becoming more constructive on the medium-term market outlook," said Mandy Xu, equity derivatives strategist at Credit Suisse in New York.
Overall, Wall Street closed little changed, with the Nasdaq slightly higher. Volume was low, marking the fifth full session this year in which trading failed to reach 5 billion shares.
European shares closed a hair above break-even. MSCI's all-country world index .MIWD00000PUS, a measure of 45 equity markets around the world, was down 0.14 percent.
Shares of smartphone maker BlackBerry (BBRY.O) rose 10.5 percent to $10.78 after the company said it has established a committee to explore strategic alternatives, including a possible sale.
Shares of Apple Inc (AAPL.O) rose 2.8 percent to $467.36 after technology blog AllThingsD reported the company is expected to present its redesigned iPhone in September.
The Dow Jones industrial average .DJI closed down 5.83 points, or 0.04 percent, at 15,419.68. The Standard & Poor's 500 Index .SPX fell 1.95 points, or 0.12 percent, at 1,689.47. The Nasdaq Composite Index .IXIC rose 9.84 points, or 0.27 percent, at 3,669.95.
"We shouldn't equate the all-time highs with the market being rich. There's still value in the market, but in the short term we've gotten ahead of ourselves," said Matthew Keator, partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.
European shares steadied around two-month highs. The FTSEurofirst 300 .FTEU3 index of top regional shares closed up 0.04 percent at 1,230.03.
The dollar slipped against the yen early on Monday after data showed Japan's economy grew an annualized 2.6 percent in the period from April to June, a third straight quarter of expansion, though slower than expected.
But the yen then reversed gains, with the dollar up 0.63 percent at 96.82 yen. Against the euro, the yen was up 0.37 percent at 128.79.
The benchmark 10-year U.S. Treasury note fell 10/32 to yield 2.6179 percent.
Brent crude oil reversed early losses to rise above $109 a barrel as traders focused on renewed supply disruptions in Libya and investors awaited clues about the Fed's next move.
Brent settled up 75 cents at $108.97 a barrel. U.S. crude rose 14 cents to settle at $106.11.