By Jeremy Gaunt, European Investment Correspondent
LONDON (Reuters) - Gold hit a new high on Monday, stoked by rising inflation expectations following the Federal Reserve's return to asset buying, and the dollar gained in a hang-over from last week's relatively upbeat U.S. jobs data.
World stocks as measured by MSCI .MIWD00000PUS were down 0.2 percent after last week hitting levels last reached prior to the collapse of Lehman Brothers. Emerging market stocks .MSCIEF were flat.
Wall Street also looked set to open lower.
Investors were digesting an idea floated in The Financial Times by World Bank President Robert Zoellick that leading economies should consider readopting a modified global gold standard to guide currency movements.
Gold briefly powered to a record above $1,398 an ounce in Asia, mainly driven by concerns that the Fed's renewed quantitative easing program will stoke underlying inflation. The metal later was down about a quarter of a percent.
Ong Yi Ling, analyst at Phillip Futures in Singapore, said gold prices had barely reacted to Zoellick's comments. "Going forward that would be something that we could look toward, but it's not going to happen within a short period of time."
The dollar is also widely seen weakening as a result of the $600 'QE2' billion program, which essentially entails printing more money. Gold tends to rise when the dollar is weak.
On Monday, however, the U.S. currency was up 0.6 percent against a basket of major competitors .DXY, recouping recent losses following better than expected U.S. jobs data on Friday.
"As we've had a good run on positive U.S. data, the market is buying back an oversold dollar," said Keiji Matsumoto, strategist at Nikko Cordial Securities.
The euro was notably weak, down 0.9 percent at $1.3920.
Some of the euro's fall against the dollar reflected renewed concern about some of the single currency bloc's peripheral economies.
Newspaper reports raising fresh doubts about Ireland's ability to fund itself internationally have weighed on the euro and caused spreads between Irish and German government bond yields to widen.
"Now that QE by the Fed has become a fact, the market is paying attention to other factors that were overshadowed ahead of the Fed meeting," said Roberto Mialich, currency strategist at Unicredit in Milan.
STOCKS MIXED
European shares were slightly lower as investors cashed in on six-month high prices reached on Friday.
The Athens bourse's banking index .FTATBNK jumped 3.4 percent, however, after results of local elections ruled out a snap general election in the economically strapped euro zone country.
The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.1 percent.
"Some degree of profit-taking doesn't come as a surprise after a gain of about 15 percent since late August. The market might lack a little bit of direction for the first day or two of the week," said Keith Bowman, analyst at Hargreaves Lansdown.
Investors were more bullish in Japan, taking the Nikkei average .N225 up 1.1 percent to a three-month closing high.
