NEW YORK/LONDON/SYDNEY, Feb 24 (Reuters) - Wall Street struggled for direction on Monday, pausing from last week's late slump, while German election results buoyed German shares and Europe's single currency and investors waited for Nvidia's midweek earnings report.
The single euro's positive reaction to Sunday's conservative election victory in Germany, the currency bloc's largest economy, capped the dollar.
U.S. stocks opened firmer on the back of a futures rebound, but then succumbed to more of the same uncertainty about U.S. growth and valuations and geopolitics that helped knock the S&P 500 (.SPX), back from record highs set early last week.
The S&P 500 (.SPX), by mid-afternoon was 0.12% firmer and the Nasdaq Composite (.IXIC), 0.3% easier. The Dow Jones Industrial Average (.DJI), was up 0.5%.
In recent sessions, weak U.S. retail sales, consumer confidence and services purchasing managers' reports, combined with higher-than-expected consumer price inflation, have eroded market confidence and, amid uncertainty over a barrage of federal government layoffs, have put U.S. stagflation in center of investor calculations.
"Now we're looking at other things, whether it's uncertainty, geopolitical, whether we're finally looking at earnings and things like that affect markets," said Joe Saluzzi, co-head of equity trading at Themis Trading.
Saluzzi said investors are distracted by German elections, the war in Ukraine, and a range of other headlines. "People get scared quick."
U.S. markets opened to a rally in German stocks and the euro, which reached a one-month high after German voters put centrist parties on track to form a coalition.
Friedrich Merz was set to become Germany's next chancellor after his opposition conservatives won the national election. Merz should be able to form a coalition to govern with the ruling centre-left Social Democrats, even though the party came third behind the far-right Alternative for Germany.
"In the end (it was) a result that was close to the latest exit polls and should be a very market-friendly outcome," said Peter Schaffrik, global macro strategist at RBC Capital Markets.
German business leaders are urging the new government to move quickly to boost the weak economy.
Germany's DAX stock index (.GDAXI), rose 0.62% but the pan-European STOXX 600 (.STOXX), index fell 0.08%.
MSCI's gauge of stocks across the globe (.MIWD00000PUS), rose 0.05%.
German coalition talks start as EU leaders are set to hold an extraordinary summit on March 6 to discuss additional support for Ukraine and how to pay for European defence needs.
This week marks three years since Russia began its full-scale invasion of Ukraine.
Wall Street took a hit on Friday when a survey on services showed a slide in activity amid concerns about tariffs and cost pressures.
The pullback has raised the stakes for Nvidia's (NVDA.O), results on Wednesday when investors will be looking for further rapid growth in revenue.
The Federal Reserve's favoured measure of core inflation is due on Friday and expected to show a slowdown to 2.6% from 2.8%, but any impact could be clouded by the focus on President Donald Trump's reliance on import tariffs as a tool for economic policy and leverage over trade partners, which could be inflationary.
A survey of U.S. consumers out on Friday showed inflation expectations for the next five years climbed to 3.5%, the highest since 1995.
The euro rose to a one-month high of $1.0528 before paring to last trade 0.23% higher at $1.0482. The dollar index , which tracks the currency against six peers, was off 0.03%.
The U.S. currency rose 0.21% against the yen to 149.61, after sliding last week on the back of rising expectations of further rate hikes from the Bank of Japan.
In commodity markets, gold was up 0.451% at $2,949.10 an ounce , having extended a string of record highs.
Oil has been heading in the other direction, in part on speculation an eventual peace deal on Ukraine could lead to an easing of sanctions on Russia that could boost its fuel exports.
Brent rose to $74.77 per barrel, up 0.46% on the day. U.S. crude rose 0.43% to settle at $70.70 a barrel.
The yield on benchmark U.S. 10-year note eased 1.6 basis points from late Friday to 4.404%.
Reporting by Alden Bentley in New York, Harry Robertson in London and Wayne Cole in Sydney Editing by Nia Williams and Nick Zieminski
