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U.S. Treasury Secretary Timothy Geithner affirmed the government's desire for a strong dollar for the first time since February, providing a reason for dealers to take profits on other currencies' strength in the run up to weekend meetings of G20 finance ministers.

However, deep-seated concerns remained among global policymakers that the Federal Reserve's path to quantitative easing will keep the dollar weak and maintain sharp upward pressure on the currencies of other economies, especially in the emerging markets.

That means the popular trade of selling dollars to buy emerging market equities and commodities is still in play.

"The reasons for the dollar being weaker, principally that move toward QE, are still very valid, so any pullbacks are not going to be enormous," said Gregg Gibbs, currency strategist with Royal Bank of Scotland in Sydney.

The euro was at $1.3935, down slightly from late in New York on Monday. The euro has been unable to maintain a foothold above $1.40 in October, which may cause frustrated traders to turn tail and sell it off to $1.3775 over the next few days.

The U.S. dollar index, which measures performance against a basket of six other major currencies, was up 0.1 percent, though still not far from a 2010 low hit last Friday.

STOCK EXCHANGES REFLECT MIXED SENTIMENT

Stock exchanges in Asia reflected mixed sentiment, with gains in Japan and Australia and declines in tech-heavy South Korea and Taiwan.

Japan's Nikkei share average rose 0.5 percent .N225, extending a gain since September to 6.9 percent, which was below the 9.7 percent returns from the U.S. S&P 500 index .SPX but above the 3.1 percent from the FTSEurofirst 300 index .FTEU3.

The MSCI index of Asia Pacific stocks outside Japan .MIAPJ0000PUS was largely unchanged on the day, with weakness in the technology sector offset by some gains in other segments.

Tech was under pressure after Apple Inc (AAPL.O) posted disappointing sales of its iPad tablet computer, drawing a pointed response from the company's chief executive Steve Jobs, who lashed out at competitors.

With the dollar at bay, gold also was under wraps, holding at $1,369.45 an ounce, well below the all-time high of $1,387.10 an ounce hit last Thursday.

Gold is still in a bullish trend but in the near term risks a profit-taking driven pullback to $1.361 an ounce.

Copper traders were not waiting for the dollar down-trend to resume before pushing up the base metal higher. Three-month copper traded on the London Metal Exchange rose 0.4 percent on the day to $8,492 a ton, the highest since July 2008.

(Additional reporting by Charlotte Cooper in TOKYO, Reuters FX Analyst Krishna Kumar in SYDNEY and Reuters Market Analyst Wang Tao in SINGAPORE; Editing by Ron Popeski)

Jobs, who has not addressed investors on an earnings call for two years, lashed out at competitors Google Inc and Research in Motion and dismissed the smaller tablets made by rivals such including Samsung and Dell.

"The current crop of 7-inch tablets are going to be DOA, dead on arrival," Jobs told analysts on the conference call. "Their manufacturers will learn the painful lesson that their tablets are too small."

Shares of Apple -- the second-largest corporation on the Standard & Poor's 500 index, after Exxon Mobil -- slid 6 percent in after-hours trading, which would be their biggest single-day loss since 2008.

Supply and production bottlenecks kept iPads, which have a 9.7-inch touch screen, from store shelves and buyers waiting weeks sometimes for their gadget. The company sold 4.19 million iPads in the fiscal fourth quarter.

"A little bit disappointing there. Street was expecting closer to 5 million units. The problem is supply, they can't make enough of them," said Gleacher & Co analyst Brian Marshall.

Analysts said sales should ramp up in the holiday quarter as Apple resolves supply hitches.

Gross margins fell short of target as iPads, whose profit margin is lower than it is for iPhones, made up a larger proportion of Apple's sales. Investors had expected more from a company that had smashed Wall Street's targets in each of the past eight quarters.

Gross margins came to 36.9 percent, below Wall Street's average forecast of 38.2 percent, despite better-than-expected components costs in the period.

"The one surprise is on the margin side. Everything else is pretty spectacular," said Gartner analyst Van Baker.

There was no disappointment in the iPhone, however, whose surging sales showed little impact from a PR debacle last summer over the device's antenna.

Apple sold 14.1 million of the smartphones, a gain of 91 percent and better than Wall Street had expected. The company said demand is still outstripping supply, with the iPhone now available in 89 countries.

Mac sales surged 27 percent to 3.9 million, at the high end of analysts' estimates. Apple Chief Financial Officer Peter Oppenheimer said the strong Mac performance was evidence that the iPad was not cannibalizing sales.

SURVEYING THE COMPETITION

Jobs noted that Apple's iPhone outsold RIM's BlackBerry in its most recent quarter. "I don't see them catching up with us in the foreseeable future," Jobs said.

"It is not going to happen in this country." Geithner told Silicon Valley business leaders of devaluing the dollar.

Geithner broke his silence on the dollar's protracted slide ahead of this weekend's meeting of finance leaders from the Group of 20 wealthy and emerging nations in South Korea, where rising tensions over Chinese and U.S. currency valuations are expected to take center stage.

"It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive," Geithner added. "It is not a viable, feasible strategy and we will not engage in it."

Answering audience questions before the Commonwealth Club of California in Palo Alto, he said the United States needed to "work hard to preserve confidence in the strong dollar."

Geithner, normally reluctant to publicly discuss currency and market movements, has not uttered the so-called "strong dollar mantra" -- a refrain he helped create at Treasury in the 1990s -- since February.

On Friday, the dollar index hit a 10-month low against a basket of major currencies, while the greenback has been plumbing fresh 15-year lows against Japan's yen .

Many emerging market countries are complaining that Fed money creation is weakening the dollar, and causing more funds to flow into their markets, pushing up their currencies.

Talk of a "currency war" has persisted as countries take action to keep from losing export competitiveness.

Brazil on Monday moved to cool a strong rally in its currency by raising taxes for foreigners buying local bonds and trading in foreign exchange derivatives.

Finance Minister Guido Mantega said the move was aimed at reducing foreign investment into Brazil, and he urged other countries to take coordinated action against the weak dollar.

Argentina's Minister of Economy and Public Finance Amado Boudou on Monday called on developed nations to focus on creating jobs rather than actions that weaken their currencies, saying a "true currency war" was underway.

U.S. POINTS TO CHINA

The G20 finance ministers and central bank governors at the meetings in Gyeongju, South Korea are expected to tackle head-on the disparities in currency policies that are distorting capital flows in the hopes of achieving a more coordinated approach.

But U.S. officials have put most of the blame on China's highly restrictive exchange rate regime, which until recently had kept the yuan largely pegged to the dollar. The United States is pressuring China to allow the value of its yuan to rise to take some pressure off capital flows and to rebalance its economy away from exports.

Apple shares fell 7 percent in extended trading.

Gross margins in the fiscal fourth quarter came to 36.9 percent, a tad below Wall Street's average forecast of 38.2 percent.

Apple sold 4.2 million iPads in its second quarter on the market, below Wall Street's expectations.

Some analysts had projected shipments of closer to or even more than 5 million for the tablet computer launched only in April, but others had warned that supply constraints had held back sales.

The company on Monday reported a net profit of $4.31 billion, or $4.64 a share, in the fiscal fourth-quarter ended September 25, up from $2.53 billion, or $2.77 cents a share, in the year-ago period.

That was better than the average analyst estimate of $4.08 a share, according to Thomson Reuters I/B/E/S.

"It's an incredible phenomenon -- not only did they beat our heightened expectations but they've blown past forecasts, and it's primarily driven by the iPhone," said BGC's Colin Gillis.

Revenue surged 67 percent to $20.3 billion, ahead of Wall Street's target of $18.9 billion.

The company forecast current-quarter earnings of $4.80 a share on revenue of $23 billion.

Shares of Cupertino, California-based Apple closed at $318.00 on Nasdaq and were halted in after-hours trading.

(Reporting by Gabriel Madway; Editing by Richard Chang)

Another report on Monday showed home-builder sentiment rose this month but remained at depressed levels, fortifying views that the U.S. central bank would pump more money into the economy at its November 2-3 meeting.

"The industrial production report illustrates, if anything, economic growth is still slowing rather than beginning to pick up again, which is yet another reason for the Fed to unleash QE2," said Paul Ashworth, a senior U.S. economist at Capital Economics in Toronto, using market shorthand for a second round of quantitative easing.

Industrial production fell 0.2 percent, the first decline since June 2009, the Fed said. Economists had expected September's industrial production to rise 0.2 percent, the same as in August.

Separately, the National Association of Home Builders/Wells Fargo Housing Market Index rose three points to 16 in October, beating economists' expectations for a 1-point rise to 14.

A reading below 50 indicates that more builders view sales conditions as poor than good. The index has not been above 50 since April 2006.

The recovery from the worst recession in 70 years has slowed markedly, leaving unemployment uncomfortably high and inflation too low for the Fed's liking.

Frustration over the sluggish economy, in particular the 9.6 percent unemployment rate, could deal a blow to the Democratic Party in November 2 congressional elections. Republicans are expected to win control of the U.S. House of Representatives and pick up some Senate seats.

The tepid recovery is also proving problematic to the Fed.

The central bank, which cut overnight interest rates to near zero in December 2008, has already pumped $1.7 trillion into the economy by buying mortgage-related and government bonds. It now appears on the verge of launching another round of bond buying.

STIMULUS SIZE UNCLEAR

On Friday, Fed Chairman Ben Bernanke offered a strong signal that more monetary policy easing was imminent.

While financial markets have largely priced in a second round of quantitative easing, it is unclear how much money the central bank will inject and Bernanke offered few clues.

Some traders scaled down bets on the size of the stimulus on Monday. Perceptions the Fed would opt for gradual asset purchases rather than a big-bang approach saw the U.S. dollar rise against the euro for a second straight session.

Bargain-hunting after recent losses lifted prices for U.S. government debt, while U.S. stock indices rose slightly after better-than-expected results from Citigroup (C.N).

The U.S. dollar bounced from a 10-month low against a basket of currencies, countering a recent inverse correlation with equities.

Citigroup Inc (C.N) shares rose 7 cents, or 2 percent, to $4.02 in premarket trade after it reported a third consecutive quarterly profit, slightly beating Wall Street's expectations, as losses slowed and the bank set aside less money to cover bad loans.

Investors will stay focused on financial shares on worries over the potential exposure of major banks to foreclosure losses. Concerns over the effects of a major probe into foreclosure practices dragged the sector lower last week.

"We need to hear what each individual bank says about this," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York

"The group has sold off going into this so the (Citi) earnings beat is enough to bring a little bounce."

S&P 500 futures fell 1.8 points but were slightly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures shed 15 points, while Nasdaq 100 futures added 3.5 points.

Apple Inc (AAPL.O) gained 1.3 percent to $318.92 ahead of its earnings expected after the closing bell and boosted Nasdaq futures. IBM Corp (IBM.N) is also expected to report after the close.

The U.S. dollar index .DXY rose 0.3 percent as investors trimmed bearish bets against the greenback on uncertainties over how much money the U.S. Federal Reserve will print in its latest effort to boost the economic recovery.

"Stocks can't continue to use (the Fed) as an excuse to rally," said Boockvar.

"This is a much more discriminating market, we're looking at companies that have reported, and that's what people are focusing on."

Shares of Halliburton Co (HAL.N) fell 2.3 percent to $34.99 in premarket trading after the world's second-largest oilfield services company reported results.

U.S. industrial production unexpectedly fell in September, while capacity utilization eased slightly, according to a Fed report that supported expectations of further monetary easing next month.

Later on Monday the National Association of Home Builders issues its October housing market index at 10 a.m. (1400 GMT). A reading of 14 is expected on the NAHB index, up from 13 in September.

(Editing by Padraic Cassidy)

Analysts said the results were mixed. Revenue rose slightly from a year earlier but fell from the second quarter, and the bank dipped into reserves to cover bad loans. Investors expressed concerns about how a widening foreclosure crisis could affect the bank's earnings.

"Earnings are OK and revenues are light, but the key will be their comments on foreclosures," said Michael Holland of Holland & Co in New York.

In the past month, U.S. government officials have launched probes into the banking industry's foreclosure practices following allegations that thousands of home foreclosures may have been illegal because they were improperly documented.

Citigroup has repeatedly said its document review process is sound, and it has declined to follow large rivals, including Bank of America Corp (BAC.N) and JPMorgan Chase and Co (JPM.N), in suspending foreclosures.

Like stronger competitor JPMorgan, Citigroup beat third-quarter earnings expectations in part by releasing money it had set aside to cover bad loans.

Analysts, who tend to discount earnings powered by reserve releases as "low-quality," have questioned how bank profits can keep growing if a sluggish economy results in low loan demand and relatively high credit losses.

"It's a problem for all the banks now -- they have trouble raising revenues," said Matt McCormick, portfolio manager, Bahl & Gaynor Investment Counsel Inc.

"Reducing loan loss reserves is not something you can do indefinitely -- eventually, they'll get to the point where they'll say, 'We can't keep going down this path.'"

Citigroup shares were up 2 percent at $4.03 in premarket trading after closing at $3.95 on Friday.

The third-largest U.S. bank by assets posted a third-quarter profit of $2.2 billion, or 7 cents per share, compared with a year-earlier loss to shareholders of $3.2 billion, or 27 cents per share.

Analysts on average had expected a profit of 6 cents a share, according to Thomson Reuters I/B/E/S.

On an ongoing basis, excluding an $800 million pre-tax loss on the sale of its student lending operations, Citigroup earned $2.6 billion, or 8 cents per share.

Revenue was the lowest of any quarter this year at $20.7 billion.

Citigroup, which is still 12 percent owned by the U.S. government, has recovered from the worst of the losses that forced it to take three bailouts in 2008 and 2009. But like its rivals, it has struggled to make new loans this year.

(Reporting by Maria Aspan; additional reporting by Steve Eder; editing by John Wallace)