By Chris Prentice and Amanda Cooper
NEW YORK/LONDON (Reuters) - Global shares turned lower on Monday as traders focused on U.S. inflation data and chip stocks fell, while Beijing's promise of stimulus and the sudden collapse of the Syrian government boosted oil and gold prices more than 1%.
U.S. inflation data this week could cement a December interest rate cut by the Federal Reserve at its meeting next week. China's decision on Monday to alter the wording of its stance toward monetary policy for the first time since 2010 helped global sentiment. Beijing pledged to introduce stimulus to encourage economic growth next year.
The rapid collapse over the weekend of Syrian President Bashar al-Assad's 24-year rule complicates an already fraught situation in the Middle East.
Friday's U.S. monthly employment data was strong enough to soothe any concerns about the resilience of the economy, but not so robust as to rule out a rate cut from the Federal Reserve next week.
MSCI's gauge of stocks across the globe fell 2.05 points, or 0.23%, to 871.68.
The Dow Jones Industrial Average fell 240.59 points, or 0.54%, to 44,401.93, the S&P 500 fell 37.42 points, or 0.61%, to 6,052.85 and the Nasdaq Composite fell 123.08 points, or 0.62%, to 19,736.69.
Shares of chip maker Nvidia fell 2.5% after China's market regulator said it had opened an investigation into the company over suspected violation of the country's antimonopoly law.
"In addition to being reminded that December is positive 'close to three-fourths of the time,' we have seen record equity inflows, full positioning from asset managers and the highest ever reading from the Conference Board’s survey of retail investor expectations," Morgan Stanley (NYSE:MS)'s chief investment officer, Lisa Shalett, said in a note.
"Complacency indicators are flashing, however, and while we appreciate technicals’ short-term validity, we encourage long-term investors to be measured in their enthusiasm," she said.
European shares closed at their highest levels in six weeks on Monday, led by mining and luxury stocks, after China's promise of renewed stimulus. The STOXX 600 index edged up 0.1%, and notched its eighth consecutive session of gains.
COULD EXPECTED FED RATE CUT BE DERAILED?
Last week's U.S. November payrolls report showed 227,000 jobs were created, compared with expectations for a rise of 200,000, while October's hurricane-distorted number was revised up.
Markets now imply an 85% chance of a quarter-point cut at the Fed's Dec. 17-18 meeting, up from 68% ahead of the jobs figures, and markets have a further three cuts priced in for next year.
The next test is Wednesday's U.S. inflation report.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,rose 0.2% to 106.16, with the euro down 0.15% at $1.0552.
U.S. Treasury yields rose as traders waited to see whether stubbornly high price pressures could derail expectations for a Fed rate cut next week. The yield on benchmark U.S. 10-year notes rose 5 basis points to 4.203%, from 4.153% late on Friday..[US/]
The European Central Bank is widely expected to deliver a quarter-point cut on Thursday.
In Asian markets, Chinese stocks and bonds rallied after China's Politburo was quoted as saying that the country will adopt an "appropriately loose" monetary policy next year, rather than a "prudent" one, marking the first time it has changed the wording of its stance in around 14 years.
MSCI's broadest index of Asia-Pacific shares outside Japan closed higher by 0.88%.
South Korean stocks slid 2.8%, while the won currency weakened, even as authorities pledged all-out efforts to stabilise financial markets amid uncertainty over the fate of President Yoon Suk Yeol.
This week is full of central bank meetings, aside from the ECB's. The Swiss National Bank could cut rates by as much as half a point given slowing inflation, as could Canada's central bank when it meets on Wednesday.
The Reserve Bank of Australia meets on Tuesday and is one of the central banks expected to hold fire, while Brazil's central bank is set to hike again to contain inflation.
"With geopolitical uncertainty high and conflicting signals from hard and soft data, monetary policy remains the only game in town to support economic activity, especially in the absence of strong political leadership in Paris and Berlin," said Barclays (LON:BARC) economist Christian Keller.
In France, President Emmanuel Macron had yet to name a new prime minister after Michel Barnier's minority government collapsed last week over his austere budget.
Geopolitical concerns lifted both oil and gold.
Spot gold gained 1.1% to $2,662.98 per ounce, and U.S. gold futures settled 1% higher at $2,685.50.Oil prices rose over 1%, with Brent futures settling up 1.4% at $72.14 per barrel. U.S. crude finished up 1.7% at $68.37.
"Events in Syria over the weekend could impact the crude market and increase the geopolitical risk premium on oil prices in the weeks and months to come amid yet more instability in the Middle East region," said Jorge Leon, Rystad Energy's head of geopolitical analysis.