* Dollar gains; oil remains weak
* Empire State manufacturing way below expectations
* U.S. stocks rebound from sluggish start
(Adds oil settlement prices)
By Chuck Mikolajczak
NEW YORK, Aug 17 (Reuters) - World equity indexes gained
modestly on Monday as upbeat U.S. housing data helped Wall
Street shrug off a weak manufacturing report, while the prospect
of higher U.S. interest rates lifted the dollar for a third day.
U.S. equities rebounded from a lower open as a report showed
that U.S. homebuilder sentiment rose in August to its highest
level in nearly a decade. ID:nL3N10S4N5
Earlier, stocks had dropped as Empire State data showed
August manufacturing activity in New York was at its weakest in
years. ID:nL1N10S0J8
"Investors are in pause mode leading up to the Fed minutes
later this week," said Terry Sandven, chief equity strategist at
U.S. Bank Wealth Management in Minneapolis.
"The manufacturing data did cause some weakness today
because it adds to the uncertainty before the rate hike decision
and since the global economy is showing varying degrees of
growth."
Minutes from the U.S. Federal Reserve's most recent
policymaking meeting are due to be released on Wednesday.
Investors await that document for clues on how soon the Fed may
hike rates for the first time in nearly ten years, with many
analysts expecting such a move by the end of the year.
The expectations for an impending rate hike helped the
dollar rise, as did reassurance from China fixing its yuan
exchange rate slightly higher for a second day running. The
dollar index .DXY was up 0.28 percent. ID:nL5N10S21T
Housing stocks advanced after the NAHB/Wells Fargo Housing
Market index showed U.S. homebuilder sentiment rose in August to
its highest since a matching reading almost a decade ago. The
PHLX housing sector index .HGX gained 1.1 percent.
REBOUND
European stocks bounced from last week's heavy selloff of
nearly 3 percent, with the pan-European FTSEurofirst 300 index
.FTEU3 closing up 0.25 percent.
MSCI's all-country world stock index .MIWD00000PUS edged
up 0.12 percent.
Crude oil remained weak near 6-1/2 year lows, as U.S. crude
CLc1 settled down 1.5 percent at $41.87, while Brent LCOc1
settled down 0.9 percent to $48.74, after data indicated Japan's
economy contracted in the second quarter amid oversupply
concerns. ID:nL3N10S05C
The Dow Jones industrial average .DJI rose 51.85 points,
or 0.3 percent, to 17,529.25, the S&P 500 .SPX gained 9.12
points, or 0.44 percent, to 2,100.66 and the Nasdaq Composite
.IXIC added 37.23 points, or 0.74 percent, to 5,085.46.
Germany's DAX lost 0.4 percent .GDAXI and France's CAC 40
climbed 0.6 percent .FCHI . Britain's FTSE 100 .FTSE was
flat, ending 0.01 percent lower.
The yuan fell more than 4 percent at one point last week,
pulling down riskier assets including emerging currencies
globally on fears of a currency war. But China slowed the pace
of the currency's drop, and on Monday fixed it higher for the
second day in a row. ID:nL3N10S1EH
Benchmark 10-year notes US10YT=RR were last up 14/32 in
price to yield 2.1502 percent from 2.198 late on Friday.
ID:nL1N10S0ZL