Dollar dips, gold gains on global risks; U.S. stocks bounce

By Caroline Valetkevitch

NEW YORK (Reuters) - Tensions over North Korea pressured the dollar against the yen and lifted gold prices on Monday, while U.S. stocks rose after three straight days of losses as investors shifted their focus to earnings.

North Korea had a failed missile test launch over the weekend, adding to regional tensions that have escalated in recent weeks as U.S. President Donald Trump has taken a tough rhetorical line with Pyongyang.

"We are seeing once again a little bit of a flight to safety as a result of the news over the weekend of North Korea's attempted missile test. That's resulting in a little bit of a weakness in the U.S. dollar," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

The dollar fell to a five-month low against the safe-haven yen, while the U.S. dollar index was down 0.4 percent. Gold gained 0.7 percent to hit a five-month high.

Most major European markets were closed for Easter Monday, while Wall Street reopened after being closed for the Good Friday holiday.

Data showing China's economy grew more quickly than expected in the first quarter helped to offset some geopolitical worries.

First-quarter results from U.S. companies will draw investors' attention as reporting picks up this week. Shares of Netflix, due to report after the bell, were up 2.9 percent.

The Dow Jones Industrial Average was up 121.98 points, or 0.6 percent, to 20,575.23, the S&P 500 had gained 13.39 points, or 0.57 percent, to 2,342.34 and the Nasdaq Composite had added 34.37 points, or 0.59 percent, to 5,839.52.

"People want to be focused on earnings and how the economy is doing," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

"Financials should do well... but they've given most of the gains back that they've seen since President Trump was elected."

Financial shares rallied after the Nov. 8 election on hopes of deregulation under Trump and expectations of higher interest rates.

World stocks as measured by the MSCI world equity index rose 0.5 percent.

The United States, its allies and China are working together on a range of responses to North Korea's latest failed ballistic missile test, Trump's national security adviser said on Sunday, citing what he called an international consensus to act.

That dwarfed any relief for market players after the U.S. Treasury did not name China as a currency manipulator, avoiding an all-out confrontation on currencies between the world's two largest economies.

In a highly anticipated report on Friday, Trump's administration declined to name any major trading partner as a currency manipulator, backing away from a key campaign promise to slap that label on China.

U.S. bond prices were mostly flat. The 10-year U.S. Treasury yield was at 2.23 percent.

Crude oil prices slipped following three straight weeks of gains, but the strong economic growth in China and a weaker dollar limited losses.

Benchmark Brent crude futures were down 43 cents at $55.46 a barrel, while U.S. crude futures were down 45 cents at $52.73.

(Additional reporting by Saqib Iqbal Ahmed and Richard Leong in New York; Hideyuki Sano in Tokyo; Editing by Meredith Mazzilli and Dan Grebler)