Stocks in the United States slipped on Monday, as oil turned higher after a sharp drop last week, overshadowing gains in banks after stronger-than-expected results were reported by Bank of America.
Shares in Merck and Schering-Plough led the pharmaceuticals sector lower after a shared cholesterol-fighting drug failed a clinical trial and raised questions about its potential cancer risk.
The price of oil further dampened the mood as it rose by more than $US2 to above $US131 a barrel.
But bank stocks rose after Bank of America followed Wells Fargo, JPMorgan Chase and Citigroup in reporting strong results.
Merck's stock slid 6.2% to $US35.33 and Schering-Plough sank 11.6% to $US18.95.
A cholesterol drug known as Vytorin, which is sold by Merck and Schering-Plough, failed to meet the main goal of improving outcomes in a closely watched heart study.
Slightly higher incidents of cancer deaths were also seen in those taking the drug -- 39 versus 23 on placebo -- although the lead researcher said those could have occurred as a result of chance.
In other drug company news: Swiss pharmaceutical company Roche offered to buy all the outstanding shares of Genentech Inc that it does not already own, for nearly $US44 billion.
Genentech is the world's second-largest biotechnology company.
The Dow Jones industrial average fell 29.23 points, or 0.25%, to 11,467.34. Standard & Poor's 500 Index dipped 0.68 of a point, or 0.05%, to 1,260. The Nasdaq Composite Index slipped 3.25 points, or 0.14%, to 2,279.53.
Trading was thin on the New York Stock Exchange, with about 1.20 billion shares changing hands. About 1.85 billion shares were traded on the Nasdaq.
European shares up
Gains in financial stocks lifted European shares on Monday.
The pan-European FTSEurofirst 300 index closed 0.5% higher at 1,170.16 points, ending higher for the fourth session in a row. The index gained around 3.2% last week.
The DJStoxx European banks index rose 0.9%. However, HBOS fell 6.2% after only 8.3% of the shares in a Â£4 billion rights issue, were taken up.
Around Europe: Germany's DAX index added 0.7% and France's CAC 40 rose 0.7%.
In Britain, the FTSE 100 closed 0.5% higher, up 27.9 points at 5,404.3. It rose 0.5% last week. But the index is still down 16% to date this year.
NZ market also up
The NZX 50 index opens at 3148 on Tuesday after closing up 27.4 points on turnover of $153 million on Monday.
In currency markets, the New Zealand dollar slipped overnight to be trading at US75.99 cents, 78.0 Australian cents, 38.03 pence, 81.13 yen, and 0.4783. The Trade Weighted Index was at 67.29
The Australian 200 Index recorded huge gains of 171-points or 3.5%, to close at 5011.