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SINGAPORE (Reuters) � The dollar was on the defensive and gold held near a record high on Monday as possible further Federal Reserve moves to increase money supply weighed on the U.S. currency and boosted alternative assets.

Uncertainty about the global economic recovery, fueled by weak U.S. consumer sentiment data on Friday, and a public holiday in Japan also kept many investors sidelined, with oil steady after a drop last week and Asian equities treading water.

Japan intervened to sell yen for the first time in six years last week, partially interrupting a decline in the dollar that began when talk of further quantitative easing -- effectively printing money -- by the U.S. central bank revived last month.

"If the Fed decides to give more hints it is about to embark on more QE, the U.S. dollar slide will probably continue," said John Kyriakopoulos, a currency analyst at National Australia Bank in Sydney.

The Fed is not expected to make any new monetary policy moves on Tuesday, but the post-meeting statement will be closely parsed for signals on the debate about whether further large-scale asset purchases are needed to support the sluggish recovery.

Views differ among Fed officials about whether stubbornly high unemployment merits more aggressive policy intervention.

Recent data appear to indicate the U.S. economy is not sliding back into recession as some market watchers had feared, but investors are wrestling with how to value stocks as the global recovery loses momentum and sales outlooks grow more unclear.

MSCI's broadest index of Asian shares outside Japan was flat (.MIAPJ0000PUS), with equity markets gaining modestly in Singapore (.FTSTI) and Taiwan (.TWII) but losing ground in Hong Kong (.HSI), South Korea (.KS11) and Australia (.AXJO).

BETS AGAINST DOLLAR

Market sentiment on the major currencies was summed up by the latest Commodity Futures Trading Commission data. They showed investors had increased bets against the U.S. dollar to the highest level in a month, while sharply cutting back net short positions in the euro and sterling.

On Monday, the dollar was parked at 85.70 yen, having spent Friday in a tight 85.57 to 85.92 range as the risk of further intervention by Tokyo kept investors away.

Gold, which tends to benefit from economic uncertainty as it is viewed by many investors as a safe-haven asset, traded around $1,279 an ounce, not far from the all-time peak of $1,282.75 struck on Friday.

U.S. crude oil futures, which slipped nearly 4 percent last week, gained 34 cents to $74 a barrel, with many traders waiting for the Fed's readout on the U.S. economy.

"If they lower their forecasts as some people are expecting, oil prices would be pushed down because it implies lower demand," said Michelle Kwek, an analyst at Informa Global Markets in Singapore.

ZHENGZHOU, China/HONG KONG (Reuters) � Japan's Nissan Motor Co Ltd (7201.T) plans to double its capacity in China to 1.2 million units by 2012, as it aims for a 10 percent share of the world's biggest auto market, its top executive said on Monday.

The new plan is 20 percent above Nissan's earlier production target, underscoring the car maker's strong interest in China, which has been a major bright spot for many automakers as the global industry struggles to recover from a steep downturn.

Nissan, 44 percent held by France's Renault SA (RENA.PA), runs an auto venture with Dongfeng Motor Group Co Ltd (0489.HK), which on Monday announced the opening of its first sport utility vehicle (SUV) plant in the central Chinese city of Zhengzhou.

Separately, Nissan-Renault has no plan to buy shares in General Motor's (GM.UL) upcoming initial public offering, Chief Executive Carlos Ghosn told Reuters on the sidelines of the opening ceremony for its new SUV plant.

Ghosn also told reporters that Nissan was expanding its other two production bases in China.

"Our three key manufacturing bases in Zhengzhou, Huadu and Xiangfan, we will nearly double Nissan's current production capacity in China to 1.2 million vehicles by 2012," he said at the opening ceremony. "This is 200,000 more cars than we announced at our year-end results this past May."

The new SUV plant in Zhengzhou has a total investment of 1 billion yuan ($148.7 million), and will be run by Zhengzhou Nissan Co Ltd, a joint venture between Nissan and Dongfeng.

The new plant would have an annual capacity of 180,000 units and together with Zhengzhou Nissan's first plant, the company's total production volume would reach 240,000 units by 2012 after the expansion, Zhengzhou-Nissan said in a statement.

"The Zhengzhou Nissan plants -- currently our base for light commercial vehicles and sport utility vehicles -- now comprise our second-largest production site in China after Huadu," Ghosn said in the statement.

China's car sales in August jumped nearly 60 percent from a year earlier, bouncing back strongly after sluggish sales in the summer months with help from central government subsidies for fuel-efficient models.

Ghosn said Nissan aimed for a 10 percent share of the China market but gave no timeframe for the goal. Japanese automakers had a combined market shares of about 20 percent, he said.

(Reporting by Fang Yan, writing by Sui-Lee Wee; Editing by Chris Lewis)

NEW YORK (Reuters) � The sputtering global economy is complicating life for policymakers from Washington to Tokyo.

When the financial crisis erupted in 2007, authorities around the world began throwing nearly everything they had at the problem to avoid a re-run of the Great Depression.

Three years later, with the global recovery losing momentum, they find themselves in a tough spot yet again.

This time, if things get worse, they won't have as many tricks left in the bag to jump-start their faltering economies. What's more, whatever medicine they prescribe may well come with unpleasant side effects.

For the Federal Reserve, the medicine in question could be more large-scale purchases of U.S. Treasury bonds, though officials are unlikely to unleash that option at their policy-setting meeting on Tuesday.

Officials at the U.S. central bank disagree on many fundamental questions: How dark is the outlook? What should the threshold for further support be? Would pumping more money into the financial system be effective or could it do more harm than good?

"The economy is not falling apart, so easing now could send a signal that folks at the Fed are a little bit panicked," said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Connecticut.

"They need to make sure if they do more that the case for it is strong and the case is well-explained."

Further Fed easing could make things even more difficult for other countries, which are resorting to their own tactics to defend their economies.

Japan last week intervened in currency markets for the first time in six years to weaken its yen in a last-ditch bid to improve the competitiveness of its exports in a world of weak demand.

A strong yen curbs Japanese exports and weighs on production, making it harder for Tokyo to end the long spell of falling prices that dampens consumer demand and discourages corporate investment.

Although Japanese markets will be closed for holidays on two days next week, another round of foreign exchange intervention could still be forthcoming and will keep markets on edge.

Japan's unilateral move to devalue its currency sparked fears other countries might follow suit and deal a crippling blow to the global recovery. It also elicited stinging criticism from other countries.

"We don't like the behavior of the Japanese authorities," the head of the euro zone group of finance ministers, Jean-Claude Juncker, told reporters on Thursday.

European growth has been driven by Germany's export-led economy. Policymakers worry a strengthening euro, which rose nearly 5 percent in three days on Japan's move, could further slow Europe's recovery.

"Everyone seems to want a weaker currency in this environment to drive exports, but clearly not everyone can," said Mark McCormick, a currency strategist at Brown Brothers Harriman in New York.

A range of European data next week on manufacturing, consumer confidence and Germany's business climate is expected to add to evidence of a slowdown.

Coupled with revived worries about European debt burdens and the health of euro zone banks, the slowdown spells the potential for more anxiety for financial markets.

The European Central Bank kept rates on hold at a record low 1 percent this month and extended unlimited liquidity to banks until at least early next year, further delaying its exit from emergency lending measures.

Markets will watch any comments from ECB policymakers about the outlook for the economy and policy there. ECB President Jean-Claude Trichet will attend a euro-zone conference in Estonia on Sunday and Monday, while ECB Executive Board member Juergen Stark will speak in Italy on Friday.

The global backdrop will no doubt be on Federal Reserve officials' minds as they mull the costs and benefits of pumping more money into the financial system.

Fed Chairman Ben Bernanke said in late August that he would need to see a significant deterioration in U.S. economic conditions before easing monetary policy further. The Fed has already cut interest rates to near zero and bought $1.7 trillion in longer-term bonds.

It is unlikely the threshold for further large-scale purchases has yet been met, given a slightly better tone to recent data.

The data "lifts some of the pressure, and when you have a divided committee, if you are not pressured, you move sideways," said Vince Reinhart, a former senior Fed staffer.

Some Fed officials worry that if any further monetary easing is not effective in spurring the recovery, it would tarnish the U.S. central bank's much-needed credibility. Others worry about the potential for market disruption or sowing the seeds for inflation down the road.

"They will acknowledge the problem in the outlook and look for a compromise that kicks the can down the road," Reinhart said.

Some officials, including Dallas Fed President Richard Fisher, argue that the ball is now in the government's court to do more to support the economy.

The House of Representatives will vote on a package of loan incentives and tax breaks for small businesses next week.

With the unemployment rate stuck at 9.6 percent, Democrats are eager to show voters they are taking steps to help the economy as the November 2 congressional elections approach. Many of their job-creation efforts have been blocked by Republicans this year.

NEW YORK/PARIS (Reuters) � U.S. foods group General Mills (GIS.N) declined to comment on Sunday on a British newspaper report that it was mulling a bid for French yogurt maker Yoplait following a contract dispute.

The Sunday Times said in an unsourced report that the maker of Cheerios cereal could pay 1 billion pounds ($1.56 billion) for unlisted Yoplait, whose products it distributes in the United States.

"As a standing practice, we don't respond to rumors or comment on speculation," General Mills spokeswoman Kirstie Foster said.

General Mills said last week it was seeking arbitration over a dispute with the French entity from which it licenses the Yoplait name. It said it was objecting to a French bid to terminate their 30-year-old distribution deal.

Yoplait is co-owned by Sodiaal, France's largest milk cooperative, and private equity fund PAI Partners.

The French fund said in July that it would be open to potential offers for its stake.

A U.S. bid in the French dairy sector could rekindle memories of an unexpected dispute over the industry five years ago.

Speculation of a bid from PepsiCo (PEP.N) for Yoplait's French rival Danone (DANO.PA) drove up the latter's share price in mid-2005 and triggered talk of a foreign takeover.

The then-conservative government -- led by Dominique de Villepin, a party rival to the current conservative President Nicolas Sarkozy -- responded by declaring the dairy industry strategic and introducing a policy of "economic patriotism."

The interest from PepsiCo was never publicly confirmed, but the dispute was credited with speeding up the introduction of rules to regulate hostile foreign bids in strategic industries.

A presidential decree named 11 protected industries such as defense, leaving a lasting mark on French merger policy even though dairy did not make it to the ring-fenced list.

(Reporting by Ransdell Pierson and Tim Hepher; Editing by Maureen Bavdek)

NEW YORK (Reuters) � If the Federal Reserve's view of the economy brightens by just a glimmer this week, it could push the stock market above its four-month trading range.

The S&P 500 closed the week at the higher end of that range, just below 1,130. Some chartists see a break above it as presaging a test of the year's highs.

But options trading suggests some see 1,130 as the market's ceiling and are protecting their portfolios against a decline.

Other investors see the Federal Open Market Committee policy meeting on Tuesday as the turning point that stocks have been searching for to break out of the range with conviction.

"Going up to the close on Tuesday, we could see a little bit of enthusiasm, and perhaps it could be the catalyst that could push us above 1,130 on the S&P," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

In late August, Fed Chairman Ben Bernanke said he would need to see a significant deterioration in economic conditions before easing monetary conditions further. Recent data, including a stronger-than-expected reading on private-sector jobs growth, could prevent further action from the Fed.

If the Fed does move, people "wouldn't interpret it as a bad sign (for the economy) but as the Fed being vigilant in trying to keep this recovery going," Jacobsen said.

Most analysts do not see the Fed moving in that direction immediately, but Jacobsen said any signal will be welcome.

"It could be the impetus that's needed to push people out of bonds and into stocks, finally," he said.

ALL EYES ON TECHNICALS

Even with stocks losing a bit of momentum as some technical indicators suggest, the S&P 500 seems poised to move above 1,130. Some chartists see breaking that level as a harbinger of future gains, with overhead resistance not seen until 1,173 and then at the year's high near 1,220.

Having pierced 1,130 three times in the last three months, the level is garnering attention even from investors who are more focused on fundamentals than technical analysis.

"Whenever economic uncertainty bubbles up, that's when technicals take over in terms of what market participants look for," said Wasif Latif, vice president of equity investments at USAA in San Antonio, Texas.

"A lot of people have been looking at 1,130 and we look at it as a component because other people are acting on it."

For the week, the Dow Jones industrial average (.DJI) gained 1.4 percent, while the Standard & Poor's 500 Index (.SPX) advanced 1.5 percent and the Nasdaq Composite Index (.IXIC) jumped 3.3 percent.

OPTION TRADERS HEDGING BETS

The CBOE Volatility index, or VIX (VIX.N), continued to show high volume as investors were bracing for volatility.

"After VIX September options expired on Wednesday, I expected that index options activity to drop," said Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research in Austin, Texas.

"But on the day, there was actually a big volume on puts and calls, suggesting that as soon as September contracts expired, they replaced the VIX contracts again for protection."

A large put spread was made on the S&P 500 index (.SPX) that suggested a substantial move lower in the short term, according to Chris McKhann, an analyst at optionMonster.com.

HOUSING DATA ALL WEEK LONG

In terms of economic data, this week's schedule has nearly a daily dose of housing indicators. From the housing market index on Monday to housing starts on Tuesday, followed by existing home sales on Thursday and new home sales on Friday, investors will get a clearer picture of a key sector that must improve before the economic recovery can really kick in.

"It's been so terrible lately that it doesn't have to be strength -- just a sign of life in the housing market could be support for financial markets overall," Jacobsen said.

(Reporting by Rodrigo Campos; Additional reporting by Angela Moon; Editing by Jan Paschal)

BERLIN (Reuters) � Organizers of an event where the head of Germany's bank rescue fund was reported as saying the country's lenders needed 200 billion euros ($261.7 billion) in fresh capital said the report was wrong and that no such sum had been named.

Weekly magazine Euro am Sonntag reported that Hannes Rehm, head of the Soffin bank rescue fund, had told an event hosted by Dresden-based asset management firm Damm-Rumpf-Hering Vermoegensverwaltung that German lenders needed more money.

"German banks need 200 billion euros in additional capital," the magazine reported Rehm as saying.

Asked about the comment, Rocco Damm, one of the firm's managing directors, told Reuters on Sunday he had double-checked with his two business partners and three others present at the event, and that all agreed Rehm had not mentioned the sum.

"All I can say as one of the organizers is that this sentence was not said," he said. "Definitely not."

Damm said there had been talk about a figure of 50 billion euros, which, according to media reports, Germany's 10 biggest banks may need to raise to comply with tougher new rules for the financial sector known as Basel III.

A spokeswoman for Rehm, who could not be reached, declined to comment on the report.

Gerhard Stratthaus, another member of Soffin's three-strong management committee, said that he had not been present in Dresden but that the 200 billion euros appeared very high and had not been mentioned officially by the fund.

"I'm not familiar with this figure," he told Reuters.

Separately, Daniel Volk, a member of the ruling Free Democrats (FDP) who sits on the Bundestag lower house of parliament's finance committee, said that to his knowledge the sum reported by Euro am Sonntag had not been requested by banks.

"Ultimately is it's about whether applications for capital injections have been submitted to Soffin," he told Reuters. "I'm not aware of any such applications."

($1=.7641 Euro)

(Reporting by Dave Graham; Editing by Hans Peters)