Dollar slips as shutdown drags on; stocks mixed

The dollar declined and Treasuries halted a recent selloff as investors assessed the impact of the U.S. government's partial shutdown. European and Asian equities were mixed.

The greenback edged lower against most major currencies as the disruption to federal services dragged into a third day. The euro climbed on optimism that German Chancellor Angela Merkel has made a potential breakthrough toward a fourth term. Traders monitored China's appetite for a stronger currency as the yuan touched the symbolically key level of 6.4 per dollar. South Africa's rand rose to its highest since 2015 on speculation President Jacob Zuma may be forced to leave office. U.S. stock futures fell. "Due to the limited economic impact, markets should be largely unaffected," by the government shutdown, said Poul Kristensen, portfolio manager at New York Life Investment Management. "If there is a little pullback, we believe it will be a buying opportunity. The last time the government shut down in 2013, markets moved higher."

Equity investors appear to have taken the latest U.S. government drama in their stride as the optimism over economic growth and profit increases that pushed many stock indexes to all-time highs lingers. Meanwhile, the next catalyst for bonds may come from commentary by policy makers after European and Japanese central bank decisions this week. Their signals that unprecedented stimulus will soon be wound back has sparked a surge in yields this month.

Elsewhere, West Texas oil was steady, paring earlier gains on OPEC and Russia saying output cuts will continue until the end of the year.

Barring any last minute changes in Washington, President Donald Trump will join world leaders and senior executives in Davos, Switzerland, for the annual World Economic Forum. Central banks: Bank of Japan monetary policy decision and briefing on Tuesday; European Central Bank rate decision on Jan. 25. U.K. Prime Minister Theresa May's Brexit bill is set to be taken up in the House of Lords. Earnings season is in full swing: Netflix and Halliburton are due to post results Monday, with Novartis, General Electric, Intel, LVMH Moet Hennessy Louis Vuitton, Starbucks, Hyundai Motor and Fanuc Corp. coming later in the week.

The Stoxx Europe 600 Index fell less than 0.05 percent as of 10:19 a.m. London time. The MSCI All-Country World Index climbed 0.1 percent to the highest on record. The MSCI Emerging Market Index gained 0.5 percent, hitting the highest in almost 10 years. Futures on the S&P 500 Index dipped 0.2 percent. The euro climbed 0.3 percent to $1.2256. The Bloomberg Dollar Spot Index fell 0.2 percent to 1,133.91, the lowest in about three years on the biggest fall in a week.

The British pound increased 0.3 percent to $1.3904, the strongest in 19 months. The yield on 10-year Treasuries declined one basis point to 2.65 percent, the biggest drop in more than a week. Germany's 10-year yield gained two basis points to 0.58 percent, the highest in a week on the largest rise in more than a week.