Global stocks lower as early gains fade; oil higher

By Dion Rabouin

NEW YORK (Reuters) - A gauge of global equity stocks turned lower on Monday as oil prices pulled back from earlier highs and investors took profits on last week's gains.

Saudi Arabia announced a plan to work with OPEC members Venezuela and Qatar and non-OPEC producer Russia on a plan to freeze oil output at January highs.

A Reuters survey also indicated the Organization of Petroleum Exporting Countries pumped less crude this month than in January, boosting market sentiment.

Oil's move higher initially helped markets overcome an unexpected drop in contracts for home resales to the lowest level in a year and a dismal report on U.S. business sentiment.

But equity markets reversed after Brent crude pulled back from earlier highs.

"The market's had a big run, so I don't think it's anything drastic, just lightening up after a big pop," said J.J. Feldman, portfolio manager at Miracle Mile Advisors in Los Angeles.

The S&P 500 rose 1.5 percent last week to cap off its best two-week performance in two years.

"Volatility's kind of dying down and you're seeing some profit taking ahead of some big data coming up this week," Feldman said.

Two manufacturing purchasing managers index surveys will be released on Tuesday and on Friday the Labor Department will release the U.S. non-farm payrolls report.

The Dow Jones industrial average fell 93.68 points, or 0.56 percent, to 16,546.29, the S&P 500 lost 11.03 points, or 0.57 percent, to 1,937.02 and the Nasdaq Composite dropped 19.72 points, or 0.43 percent, to 4,570.75.

Brent futures settled up 2.5 percent at $35.97 a barrel. U.S. crude futures settled up 3 percent at $33.75.

China's central bank cut its reserve requirement ratio, the amount of cash banks must hold as reserves, injecting an estimated $100 billion worth of long-term cash into the economy.

The move by China helped lift stocks in Europe about 0.7 percent and had provided an early boost to Wall Street equities, as well.

MSCI's gauge of stock across the globe fell 0.15 percent. Long-dated U.S. Treasury prices rose after the weak housing data supported the view that the Federal Reserve could slow the pace of interest rate hikes this year. Recent U.S. economic reports including a pick-up in inflation had shifted the view the Fed could raise interest rates before year-end.

The benchmark 10-year note was last up 5/32 in price to yield 1.749 percent, down from 1.764 percent late on Friday.

The dollar rose 0.1 percent against a basket of six major rivals, backed largely by a move down from the euro <.EUR=>.

The continental currency fell 0.45 percent against the dollar to $1.0881 after consumer prices in Europe fell again.

A drop in the flash reading of euro zone inflation to -0.2 percent boosted expectations that the European Central Bank will have to ease policy aggressively next month.

But the dollar tumbled against the Japanese yen, losing around 1 percent.

The yen rose broadly as investors sought its safety following a statement from the Group of 20 countries that offered no concrete action to address concerns about slow growth and low inflation.

Gold, another investor "safe haven," rose and was on track for its best month in four years.

(Reporting by Dion Rabouin; additional reporting by Nigel Stephenson and Patrick Graham in London, Hideyuki Sano in Tokyo, Henning Gloystein in Singapore, Sujata Rao, John Geddie; Editing by Toby Chopra and Nick Zieminski)