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S&P 500, Dow end lower

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European shares finish down

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Gold prices reach new highs

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Brent crude settle nearly 2% higher

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Dollar index gains

(Updates with U.S. market close, recasts headline and first

paragraph, adds new analyst quote)

By Chibuike Oguh

NEW YORK, Oct 21 (Reuters) - Global equity markets lost

ground on Monday as traders remained cautious amid rising

geopolitical tensions and uncertainty over the U.S. presidential

election, helping to push gold futures to new highs.

The Israeli military is continuing its attacks against

Lebanon's Hezbollah militant group, with hundreds of Beirut

residents fleeing their homes late on Sunday as explosions

rocked the Lebanese capital.

Gold prices surged to a record high on Monday and were little

changed at $2,719.33 an ounce. U.S. gold futures

settled 0.3% higher at $2,738.9.

The benchmark S&P 500 and Dow finished lower, with defensive

stocks including real estate and healthcare among the leading

drags. The Nasdaq closed slightly stronger, with Nvidia ( NVDA )

finishing at a record high, ahead of a busy week for corporate

earnings.

The Dow Jones Industrial Average fell 0.80%, to

42,931.60, the S&P 500 fell 0.18% to 5,853.98 and the

Nasdaq Composite rose 0.27% to 18,540.01.

The European shares index lost 0.66%, while MSCI's

gauge of stocks across the globe fell 0.37%.

Overnight in Asia, MSCI's broadest index of Asia-Pacific shares

outside Japan closed 0.5% lower.

"There's just tension around the earning season kicking off

in earnest and then, of course, the elections two weeks away

even though we haven't had the typical anxiety over elections

that we normally see in September and October," said James St.

Aubin, chief investment officer at Ocean Park Asset Management

in Santa Monica, California.

Oil prices settled up nearly 2% after a more than 7% drop

last week. Brent crude futures settled up 1.68% at

$74.29 a barrel, while U.S. West Texas Intermediate crude

futures were 1.94% higher at $70.56 a barrel.

Markets are pricing in a 89.3% chance for a cut of 25 basis

points (bps) at the Fed's November meeting, with an 10.7% chance

of the central bank holding rates steady, according to CME's

FedWatch Tool. The yield on benchmark U.S. 10-year notes

rose 11.9 basis points to 4.194%.

The dollar climbed, buoyed by a rise in U.S. bond yields.

The euro was down 0.46% at $1.0815, while the pound

weakened 0.51% to $1.2982. Against the Japanese yen

, the dollar strengthened 0.86% to 150.79.

The European Central Bank (ECB) last week cut rates for the

third time this year. Data on Monday showed German producer

prices fell more than expected in September.

The dollar index, which tracks its performance

against a basket of currencies including the yen and the euro,

rose 0.49% to 103.97.

"Between the combination of escalating or still-high Middle

East tensions, and we're only a handful of days away from the

(U.S. election), it could be that the market is getting nervous

ahead of that and people are squaring some of their positions,"

said Wasif Latif, president and chief investment officer at

Sarmaya Partners.