NEW YORK (Reuters) - World share markets remained under pressure and the dollar slipped on Tuesday as oil prices climbed amid doubts over the real impact of the Iran nuclear deal and renewed political tensions in the East China Sea.
U.S. stocks were little changed during a holiday-abbreviated week as investors found few incentives to extend a rally that has repeatedly taken indexes to record peaks.
Wall Street investors have been enjoying a rally after some weak economic data bolstered expectations the Federal Reserve will hold off scaling back its stimulus, keeping a floor under equities. But they are reluctant to make further bets if the Fed is likely to reduce its support for the economy - and markets.
"We're fairly valued in the longer term, but it wouldn't be surprising to see short-term corrections since right now there's no reason to jump into the market in full force," said Mike Sorrentino, the New York-based chief strategist of the Global Financial Private Capital.
The Dow Jones industrial average was up 16.09 points, or 0.10 percent, at 16,088.63. The Standard & Poor's 500 Index was up 1.31 points, or 0.07 percent, at 1,803.79. The Nasdaq Composite Index was up 12.71 points, or 0.32 percent, at 4,007.28.
Permits for U.S. home construction rose to the highest level in nearly 5-1/2 years in October, suggesting the housing market recovery remained intact despite recent signs of slowing down.
The S&P/Case Shiller composite index of 20 metropolitan areas showed on Tuesday that U.S. single-family home prices rose in September and posted their strongest annualized gain in 7-1/2 years.
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"It is a market that is on data watch as the Fed is clearly on data watch," said Quincy Krosby, market strategist with Newark, New Jersey-based Prudential Financial, which has $1 billion in assets under management. "Permits were very, very good and it will translate into more jobs."
After mixed performances in Asia, the pan-European FTSEurofirst 300 share index struggled through the morning and was down 0.5 percent as the approaching month-end added to a general mood of caution.
With the U.S. Thanksgiving holiday on Thursday, investor appetite for fresh bold moves has been lacking.
Having reversed Monday's $3 drop, Brent oil was holding above $111 a barrel, with investors continuing to question how quickly Iranian oil could come back on stream.
"The interim six-month 'freeze' agreement on Iran's nuclear program should not have any impact on oil prices, aside from short-term sentiment, because core sanctions on oil and banking have not been touched," Societe Generale said in a note.
"If and when (a comprehensive agreement) happens, it could take Iran three to nine months to recover the 1 million barrels per day in production lost since 2011."
INFLAMMATORY REMARKS
An escalation of political tensions in parts of Asia was also in focus and helped keep gold near a one-week high, though a softer dollar left it vulnerable.
The White House has called China's demands that airlines inform Beijing when flying over disputed islands in the East China Sea, "unnecessarily inflammatory.
Thailand was also in the spotlight as anti-government protesters stepped up their bid to oust Prime Minister Yingluck Shinawatra, amid talk that the central bank had intervened in the currency market, with the baht bouncing from an 11-week low.
The China tensions kept the dollar under pressure after disappointing housing data pushed it - and U.S. government bond yields-- lower on Monday.
The dollar index which measures the greenback against six major currencies, was down 0.3 percent at 80.92, well off last week's high of 81.29.
The euro climbed 0.3 percent against the U.S. currency, while the dollar fell 0.3 percent against the yen.
"The dollar's own issues about whether Fed tapering will take place or not make the euro the next best alternative," said Daragh Maher, currency strategist at HSBC in London. "But the euro is looking rather toppish here."
The dollar extended losses against the euro and yen after data showed the U.S. consumer confidence index fell in November.
DOLLAR BULLS
The recent view of the Fed was that the central bank will wait a while longer before attempting to scale back its huge stimulus program, which has long been fueling the rally in global stocks.
It had squeezed down the yields on U.S. Treasuries overnight, and euro zone government bonds followed suit as investors kept a close eye on the ECB for any signs it is contemplating more easing. The benchmark 10-year U.S. Treasury note was up 10/32, the yield at 2.7032 percent.
Tokyo's Nikkei benchmark, as usual, bore the negative effects of the stronger yen as it shed 100 points, though it remained well within reach of a 5-1/2 year peak reached in May.
(Reporting by Nick Olivari; Editing by Dan Grebler)