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But stocks finished well off their lows of the day as the dollar retraced some of its earlier gains and energy and financial stocks rallied late in the session.

While stocks tracked movements in the euro on Monday, a strong U.S. jobs report on Friday could bring the focus back to the economy and break the strong tie between U.S. equities and the euro.

The correlation between the euro and stocks has become more pronounced in recent weeks as the euro zone's debt problems resurfaced, with traders selling the euro and stocks together.

"Tell me what the euro's going to do and I'll tell you where the (stock) market is going to go," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

Banks and energy stocks outperformed the wider market as crude oil futures rose 2.3 percent and banks recovered some of their recent losses.

The KBW bank index rose 1 percent, helped by Bank of America (BAC.N) , which climbed 1.5 percent to $11.31, while Exxon Mobil (XOM.N) reversed earlier losses to close up 0.3 percent at $69.45

Light volume added to volatility, and traders turned their attention to technical markers in the absence of more fundamental news. The S&P 500 bounced off its 50-day moving average, preserving the lower end of its recent trading range.

In the wake of a stronger-than-expected start to the holiday shopping season, investors took profits on a two-week rally in retail stocks. The S&P retail index .RLX fell 0.7 percent.

The Dow Jones industrial average .DJI dropped 39.51 points, or 0.36 percent, to 11,052.49. The Standard & Poor's 500 Index .SPX fell 1.64 points, or 0.14 percent, to 1,187.76. The Nasdaq Composite Index .IXIC lost 9.34 points, or 0.37 percent, to 2,525.22.

European Union finance ministers endorsed an 85 billion euro loan package to help Ireland bridge its deficit, but investors worried how the 16-nation bloc might handle a wider crisis involving Spain and Portugal.

The CBOE Volatility index .VIX, known as Wall Street's fear gauge, rose 3 percent to hit its highest level since early October, indicating anxiety among investors was increasing.

The 22-day correlation coefficient between the euro and the popularly traded E-Mini S&P futures has risen to 0.54, which shows a meaningful relationship between the two assets compared with an insignificant 0.06 correlation two weeks ago.

The problems in Europe overshadowed signs of improving sentiment among consumers heading into the high-spend holiday season.

The number of shoppers in stores over the long U.S. Thanksgiving holiday weekend rose 8.7 percent compared with 2009, according to a private survey.

Julian Assange declined in an interview with Forbes to identify the bank, but he said that he expected that the disclosures, which follow his group's release of U.S. military and diplomatic documents, would lead to investigations.

"We have one related to a bank coming up, that's a megaleak. It's not as big a scale as the Iraq material, but it's either tens or hundreds of thousands of documents depending on how you define it," Assange said in the interview posted on the Forbes website.

He declined to identify the bank, describing it only as a major U.S. bank that is still in existence.

Asked what he wanted to be the result of the disclosure, he replied: "I'm not sure. It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume."

He compared this release to emails that were unveiled as a result of the collapse of disgraced energy company Enron Corp.

"This will be like that. Yes, there will be some flagrant violations, unethical practices that will be revealed, but it will also be all the supporting decision-making structures and the internal executive ethos ... and that's tremendously valuable," Assange said.

"You could call it the ecosystem of corruption. But it's also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that's not done, the priorities of executives, how they think they're fulfilling their own self-interest," he said.

Assange also told the magazine that his group has material on many businesses and governments, including in Russia, and that it has some documents on pharmaceutical companies, which he did not identify.

More than 250,000 cables were obtained by the whistle-blower website and given to the New York Times and other media groups, which published stories on Sunday exposing the inner workings of U.S. diplomacy, including candid and embarrassing assessments of world leaders.

Before Sunday, WikiLeaks had made public nearly 500,000 classified U.S. files on the wars in Iraq and Afghanistan.

(Editing by Mohammad Zargham)

Shares of Amazon rose as much as 2.6 percent to an all-time high of $181.84, while smaller rival Overstock.com surged 8.1 percent and Web jeweler Blue Nile gained 5.3 percent on indications of strong traffic to retail sites.

The Monday after the U.S. Thanksgiving holiday was dubbed Cyber Monday five years ago to get consumers to focus on online shopping. But retailers have been increasingly offering online deals on Thanksgiving Day and over the holiday weekend as well.

"I would expect Cyber Monday to be as strong as sales were this weekend," said Maggie Taylor, a senior credit officer with Moody's Investors Service.

Despite competition from other days over the Thanksgiving weekend, Cyber Monday is still a big draw and could generate $900 million to $1 billion in sales, according to Jefferies analyst Youssef Squali.

Last year, Cyber Monday sales were $887 million, according to analytics firm comScore, which plans to release Cyber Monday data on Wednesday. Total 2009 U.S. online sales were $130 billion.

EBay Inc's PayPal unit reported a 21 percent rise in total payment volume on Cyber Monday over last year as of 11 am PST. It said that data point, which measures the total value of goods sold, was 34 percent higher on Cyber Monday than on Black Friday of this year.

Meanwhile, IBM Coremetrics reported that online sales as of 12:00 pm PST rose 15 percent year over year.

"The data does suggest that consumers are spending more time online this year with their spending plans, which would bode well for Amazon," analyst Hamed Khorsand of BWS Financial wrote in a note to investors.

Amazon.com deals included a TomTom portable GPS navigator for $89.99, a discount of 61 percent, a Canon flash memory Camcorder for $229 after a 40 percent discount and Barbie Fashion Fairytale Palace at $64.99 instead of $114.99.

Walmart.com did not indicate how much it had marked down items, but offered a Playstation 3 video game console bundle for $388 and a Philips 22-inch LCD HDTV for $209, among other deals.

For a graph on historical Web sales over the Thanksgiving weekend, click here: r.reuters.com/fuc67q.

WHO WAITED FOR MONDAY?

Consumers headed to stores as well as to their computers this Thanksgiving weekend, with online sales from Thursday through Sunday up 14.4 percent versus the same period last year, according to IBM Coremetrics.

Caris & Co analyst Sandeep Aggarwal said that was encouraging for e-commerce, which in recent years has outperformed brick-and-mortar retail but can still be hit by cautious consumer spending.

The Wal-Mart tie-up will help discount retailer Massmart speed up expansion in sub-Saharan Africa and increase its food retailing business, the South African company's chief executive said on Monday.

The deal will also likely pit Wal-Mart, which has long battled with organized labor in the United States, against South Africa's powerful trade unions, some of which have threatened to strike against the U.S. giant.

Massmart's chief executive, Grant Pattison, said the company would retain its local listing and South African management after the deal. Analysts have said local expertise would be critical to avoid a bruising union fight.

"What isn't going to happen is a bunch of Wal-Mart people around here start running the company," Pattison said on a conference call with reporters.

"South African management will continue to manage the business."

The two companies said in a joint statement Wal-Mart would pay 148 rand for a 51 percent stake in the South African company, which has a presence in 14 countries in Africa. The value of the deal is 16.5 billion rand ($2.3 billion), Massmart executives said.

Massmart shares were up 0.2 percent at 141.99 rand. Wal-Mart's bid, including the price, was first announced in September.

Wal-Mart shares fell 23 cents to $53.51.

NEW BALL GAME

"Owning a majority stake allows them that degree of control that they need at this stage, while it also appeases (Massmart's) shareholders," said Natalie Berg, global research director at Planet Retail, an industry research firm.

"Wal-Mart is not going to be making many changes initially. Even though they are present in 16 countries around the world, ranging from India and Costa Rica, retailing in South Africa is a whole new ball game."

The move also requires Wal-Mart to commit less capital than buying the company outright, while giving it a chance to learn about the African market.

"We probably like this a little better because (Wal-Mart is) getting control, but technically dipping a toe in the water," Edward Jones analyst Matt Arnold, said.

Wal-Mart sees international expansion as an important area for growth, as comparable sales at its U.S. discount stores have fallen in each of the last six quarters.

* European stocks rose in morning trade, in a rollercoaster session as a rescue deal for Ireland failed to dissipate worries that the country's debt crisis could spread to other euro zone economies.

* Germany and France declared that Europe had taken decisive action to save the euro by rescuing Ireland and laying the foundations of a permanent debt resolution system, but investors were not convinced.

* Under pressure to arrest the threat to the currency before markets opened and prevent contagion engulfing Portugal and Spain, EU finance ministers endorsed an 85 billion-euro ($115 billion) loan package on Sunday to help Dublin cover bad bank debts and bridge a huge budget deficit.

* The euro hovered near two-month lows against the dollar on Monday as investors looked past the rescue package to debt problems in other peripheral euro zone economies.

* South Korean President Lee Myung-bak vowed retaliation against any further provocation by the North after it attacked an island last week as anger grew at the government's weak response.

* Geopolitical risks were also fueled by U.S. diplomatic cables released on Sunday in an embarrassing leak that undermines U.S. diplomacy. According to a vast cache of diplomatic cables, Saudi King Abdullah has repeatedly urged the United States to attack Iran's nuclear program.

* U.S. oil major ExxonMobil (XOM.N) and its partners have awarded a contract to oil services firm Schlumberger Ltd (SLB.N) to drill 10 wells in Iraq's West Qurna Phase One oilfield, industry sources familiar with the matter said.

* Wal-Mart (WMT.N) made a $2.3 billion formal bid for control of Massmart (MSMJ.J), giving the world's largest retailer a substantial presence in South Africa and paving the way for further expansion across the fast-growing continent.

* Commodity related shares led U.S. stocks lower on Friday in a shortened post-holiday session as investors unloaded risky assets on worries that euro-zone debt problems may spread.

* The Dow Jones industrial average .DJI dropped 95.28 points, or 0.85 percent, to end at 11,092. The Standard & Poor's 500 .SPX slipped 8.95 points, or 0.75 percent, to 1,189.40. The Nasdaq Composite .IXIC lost 8.56 points, or 0.34 percent, to 2,534.56.

* For the week, the Dow dropped 1 percent and the S&P 500 fell 0.86 percent, but the Nasdaq Composite gained 0.65 percent. U.S. markets were closed on Thursday for Thanksgiving Day.

(Reporting by Blaise Robinson; Editing by Louise Heavens)