By Hilary Russ
NEW YORK (Reuters) - The euro fell to a one-week low against the dollar on Monday on uncertainty ahead of several impending European elections, while European and U.S. stock markets dipped ahead of a heavy week of corporate results.
Concerns over French politics ahead of the presidential vote in April, as well as other elections in Europe later in the year, dented the euro.
"Political risk is serving to dampen the euro after last week's stumble from the $1.08 area," said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.
Investors were largely focussed on French politics, as far-right National Front leader Marine Le Pen launched her presidential bid, vowing to fight globalisation and take France out of the euro zone.
The euro was trading at $1.0746, down 0.33 percent against the dollar at 1930 GMT >. It dropped to $1.0705, its weakest level since Jan. 31.
In the U.S. equity market, key indexes were modestly lower ahead of a slew of results and lingering uncertainty over the policy decisions of President Donald Trump and the potential impact of these on the economy.
The Dow Jones Industrial Average <.DJI> fell 30.44 points, or 0.15 percent, to 20,041.02, the S&P 500 <.SPX> lost 6.63 points, or 0.29 percent, to 2,290.79 and the Nasdaq Composite <.IXIC> dropped 9.62 points, or 0.17 percent, to 5,657.14.
Oil slipped, in part because ample U.S. supplies outweighed OPEC output curbs and rising tensions between the United States and Iran.
U.S. crude
A stronger dollar also dampened oil prices around mid-day. The greenback rose as much as 0.2 percent <.DXY> against a basket of major currencies before paring gains and flattening
The dollar slid to its lowest in more than two months against the yen >, pressured by a drop in U.S. Treasury yields, analysts said.
There was no overarching theme to Monday's market moves, highlighting how correlations between financial market assets have broken down in recent months as investors sense the era of ultra-loose monetary policy may be winding up.
"There is a sense of general uncertainty," said Orlando Green, European fixed income strategist at Credit Agricole. "You could say markets are a bit edgy about the political scene in Europe, the political scene in the U.S., and there's a bit of uncertainty about when the Fed will hike rates next."
European shares closed lower, with a negative note on carmakers and worries over Italian banks leading those sectors down.
The pan-European STOXX 600 index <.STOXX> fell 0.6 percent.
A risk-off sentiment boosted spot gold, which rose 1 percent to $1,232.24 per ounce, the highest since Nov. 16. >
The mounting political uncertainty in Europe and a dearth of information on Trump's promised pro-growth policies also boosted U.S. Treasury prices, with the 5-year yield touching a two-week low of 1.850 percent.
Japan's Nikkei <.N225> rose 0.3 percent, with banks rising after U.S. President Donald Trump signed an executive order to scale back regulations in the U.S. financial industry implemented after the financial crisis nearly a decade ago.
Trump meets Japanese Prime Minister Shinzo Abe on Feb. 10 and 11, with trade and currencies likely to be on the agenda.
(Additional reporting by Gertrude Chavez-Dreyfuss and Sam Forgione in New York; Danilo Masoni and Helen Reid in London; Editing by Bernadette Baum and Nick Zieminski)
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