U.S. stocks rose on Monday on strong earnings and merger activity, overshadowing concerns about the possible spread of unrest in Egypt which had caused a sharp selloff in world stocks on Friday.
The euro also recovered from Friday's weakness, helped by concerns that economic growth and inflation in Europe might result in interest rates rising in the region more quickly than in the United States.
Europe's benchmark Brent crude oil remained just short of $100 a barrel, though U.S. government debt prices slipped back as investors turned to riskier assets despite concerns that the political upheaval in Egypt could spread through to other parts of the Middle East.
Gold extended losses after U.S. economic data showed consumption beat expectations in December, while the Federal Reserve's preferred gauge of inflation rose at its most moderate pace on record.
The euro was supported by purchases made by Asian central banks and Middle East accounts, while nervousness surrounding the political crisis in Egypt is calming down as far as the currency market is concerned, said Brad Bechtel, managing director of Faros Trading, managing director at FX advisory and execution firm Faros Trading in Stamford, Connecticut.
European shares pared losses after Exxon Mobil Corp edged up 0.6 percent to $79.68 after the world's largest publicly traded oil company reported a higher-than-expected 53 percent increase in quarterly profit.
The pan-European FTSEurofirst 300 index of top shares was up 0.07 at 1,144.55 points.
The Dow Jones industrial average was up 8.63 points, or 0.07 percent, at 11,832.33. The Standard & Poor's 500 Index was up 2.72 points, or 0.21 percent, at 1,279.06.
The Nasdaq Composite Index was down 6.20 points, or 0.23 percent, at 2,680.69 after Intel Corp said on Monday it cut its first quarter revenue forecast by $300 million due to the costs associated with correcting a design flaw it discovered in one of its chips. The total cost to repair and replace the chip is expected to be around $700 million, it said.
In currencies, the dollar was down against a basket of currencies, with the U.S. Dollar Index down 0.57 percent at 77.689, while the euro was up 0.69 percent at $1.3707, and some traders expecting a move toward $1.40 in the weeks ahead. Against the Japanese yen, the dollar was down 0.11 percent at 82.01.
Protests to end the 30-year rule of Egyptian President Hosni Mubarak continued over the weekend, heightening risk aversion for European investors already concerned by the effect their own region's sovereign debt crisis and inflation could have on growth.
Traders are concerned that with already rising inflation and falling real incomes for consumers, a further rise in energy prices could really dampen any consumer confidence and prospects for growth, said Jonathan Sudaria, night dealer at London Capital Group.
Benchmark Brent crude was flat at $99.40 a barrel, after hitting a 28-month high on Friday, while benchmark U.S. crude futures were up 0.17 percent at $89.47.
Spot gold prices fell $4.74, or 0.36 percent, to $1330.00 an ounce.
Treasuries softened after data showing consumer spending rose by more than expected in December and that consumer inflation was tame. The benchmark 10-year U.S. Treasury note was down 2/32, with the yield at 3.3372 percent. The 2-year U.S. Treasury note was down 1/32, with the yield at 0.5541 percent. The 30-year U.S. Treasury bond was down 5/32, with the yield at 4.5452 percent.