GLOBAL MARKETS-Wall Street pares risk-taking but stays bullish

Wall Street's optimistic start to the New Year pushed some stocks, oil prices and the dollar higher, but investors dialled back risk-taking elsewhere on Tuesday as data showed U.S. manufacturing slowed last month and COVID-19 spread. The Dow Jones Industrial Average rose 166.57 points, or 0.46%, to 36,751.63 -- a fresh record -- while the S&P 500 lost 16.99 points, or 0.35%, to 4,779.57.

Wall Street's optimistic start to the New Year pushed some stocks, oil prices and the dollar higher, but investors dialled back risk-taking elsewhere on Tuesday as data showed U.S. manufacturing slowed last month and COVID-19 spread.

The Dow Jones Industrial Average rose 166.57 points, or 0.46%, to 36,751.63 -- a fresh record -- while the S&P 500 lost 16.99 points, or 0.35%, to 4,779.57. The technology-heavy Nasdaq Composite dropped 292.99 points, or 1.85%, to 15,539.81, a day after Apple Inc became the first company to hit a $3 trillion stock market value.

"While seats are filling up again on Wall Street, we think that market players will be slow to increase risk," Scott Ladner, chief investment officer at Charlotte-based wealth management firm Horizon Investments, wrote in an email. U.S. manufacturing activity slowed in December amid cooling demand for goods, but supply constraints are starting to ease and a measure of prices paid for inputs by factories fell by the most in a decade, according to new data from The Institute for Supply Management.

Global equities were also up earlier on Tuesday. The Euro STOXX 600 gained 0.82% to hit a record of 494.02 points, topping its previous all-time high on Monday. Asian stocks were on the front foot following Wall Street's record highs on its first trading day of 2022, with MSCI's gauge of Asia Pacific stocks outside Japan up around 0.4%. The U.S. dollar rose against the Japanese yen to hit a five-year peak as investors anticipated the Omicron variant would not derail the global economy or delay the Federal Reserve's expected rate hikes.

The dollar index rose 0.081%, with the euro down 0.08% to $1.1285. U.S. Treasury yields were also up as bond investors geared up for rate hikes from the Federal Reserve Bank by mid-year to curb stubbornly high inflation.

Minneapolis Fed President Neel Kashkari on Tuesday said he expects the U.S. central bank will need to raise interest rates twice this year to address persistently high inflation, reversing his long-held view that rates will need to stay at zero until at least 2024. Benchmark 10-year yields advanced to a six-week high of 1.6735%.

Oil prices rose again on Tuesday as OPEC+ agreed to stick to its planned increase in oil output for February, sources from the group told Reuters, because it expects the Omicron variant to have a short-lived impact on demand. U.S. crude rose 1.34% to $77.10 per barrel and Brent was at $80.16, up 1.49% on the day.

In a sign of investors hedging their bets, gold consolidated above the key $1,800 per ounce level on Tuesday, after a sharp retreat in the last session. Spot gold added 0.8% to $1,814.38 an ounce. U.S. gold futures gained 0.83% to $1,814.00 an ounce.

(Editing by David Evans and Emelia Sithole-Matarise)