US and European stocks slipped as investors reassessed the strength of the equity markets' four-week rally. That rethinking of the rally occurred in the face of rising concerns over the fiscal condition of Portugal and Ireland.

European debt fears also weighed on the euro, although the dollar continued to weaken against other major currencies on expectations that the Fed will pour money into the US economy to support its fledging recovery.

Gold benefited from the prospects of more monetary stimulus, which could prove inflationary down the road, as well as from some investors' flight-to-quality bid.

Spot gold rose to $1,296.80 an ounce after hitting an historic $1,300 an ounce, compared with $1,295.60 quoted late in New York on Friday.

The price of gold has had an extraordinary run over recent years, and for happy industry professionals holding their annual powwow in Germany, the party is set to continue.

Over the past two decades or so, gold prices have increased more than five-fold from a low of around $250 per ounce in 1999 and have almost doubled since the peak of the global financial crisis in late 2008.

During the past year, the price of the yellow metal has risen 30 percent, hitting on Friday a new record $1,300. 7 per ounce.

Participants at the start of a two-day precious metals conference in Berlin organized by the London Bullion Market Association (LBMA) forecast on average that the price of would be $1,406 per ounce in September 2011.

At last year's LBMA conference in Edinburgh, participants were overly cautious, forecasting that gold would reach $1,181 per ounce by this year's gathering.

The increase has been driven by investors worried by the crisis seeking a safe haven for their money, and by central banks in emerging economies, not least China and India, buying up hundreds of tons of gold as reserves.

Investors snapped up US Treasury debt, driven by their desire for safer investments and expectations of healthy demand at this week's Treasury auctions.

The price of the benchmark 10-year US Treasury note shot up 22/32, with the yield at 2.526 percent, down from late Friday's 2.612 percent. The 30-year bond climbed over a point, up 49/32, with the yield at 3.7079 percent, down from 3.798 percent in late Friday trading.

At 1800 GMT, the Treasury will sell $36 billion of two-year Treasury notes, followed by $35 billion in five-year notes on Tuesday and $29 billion in seven-year notes on Wednesday.

On Wall Street, the major US stock indexes declined in spite of a flurry of corporate mergers and acquisitions.

Worries about euro-zone debt resurfaced after credit agency Moody's slashed its rating on some lower-grade debt of Anglo Irish Bank.

The Moody's downgrade offset early optimism with M&A activity, and forced investors to rethink the reasons that have bolstered US stocks during the past four weeks.

"We are nearing the end of the quarter. We've had a very strong month," said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois. "We may be in for a bit of consolidation here."

The Dow Jones Industrial Average declined 24.41 points, or 0.22 percent, to 10,835.85, while the Standard & Poor's 500 Index slipped 3.85 points, or 0.34 percent, to 1,144.82. The Nasdaq Composite Index fell 8.72 points, or 0.37 percent, to 2,372.50.

Europe's FTSEurofirst 300 index of top shares closed down 0.43 percent, while the MSCI All-Country World equity index was up just 0.05 percent, or essentially flat.

The euro was practically stable against the dollar at $1.3484, after reaching a five-month high, following Moody's decision to cut Anglo Irish Bank's unguaranteed senior debt by three notches and its subordinated debt by six.

Investors have been nervous about possible restructuring of Anglo Irish Bank's subordinated debt as government guarantees for such instruments expire later this week.

The dollar fell to a session low of 84.11 yen on the electronic trading platform EBS, its weakest level since Japan intervened in the currency market about two weeks ago.

US crude oil fell 41 cents, or 0.6 percent, to $76.08 per barrel, sliding with weak stock markets as the outlook for global economic recovery raised questions about future energy demand.