* Dollar rises from 15-month lows after Fed comments
* World stocks fall from 2009 highs in risk aversion
* Oil, gold end a tad higher, shrug off dollar rise (Updates with closing prices)
By Manuela Badawy
NEW YORK, Nov 17 (Reuters) - The U.S. dollar rose on Tuesday as investors took a breather selling the currency, driving down European and Asian stocks.
Investors paused selling the U.S. dollar, which hit a 15-month low on Monday, after Federal Reserve Chairman Ben Bernanke acknowledged the dollar's slump was causing some prices to rise but said other factors restraining inflation were winning the day.
U.S. stocks rose at the end of business on Tuesday to fresh
13-month highs as upbeat broker views on improving prospects
for two Dow components offset disappointing spending outlooks
from retailers Target
Bernanke's comments on Monday dulled risk appetite and caused investors to cut bets against the dollar.
The MSCI world equity index <.MIWD00000PUS> fell 0.46 percent, having hit its highest since September 2008 on Monday, as investors stepped back from risk trades and took a breather from an eight-month rally that has pushed the index 75 percent higher.
The Dow Jones industrial average <.DJI> ended up 0.29 percent, at 10,437.42. The Standard & Poor's 500 Index <.SPX> rose 0.09 percent, at 1,110.32, while the Nasdaq Composite Index <.IXIC> rose 0.27 percent, at 2,203.78.
Investors shrugged off a weaker-than-expected U.S. industrial production report which earlier in the day pressured the stock market on concerns about the sustainability of the economic recovery. For story on data see [ID:nN17546734].
COMMODITIES SHRUG DOLLAR
A weaker dollar typically supports commodity prices because dollar-priced contracts -- such as those for oil and gold -- become cheaper for buyers using other currencies.
Despite a rebound in the dollar, commodities such as oil and gold ended slightly higher on the day on short-covering.
Crude oil
Meanwhile, a report showed U.S. industrial production rose by a smaller-than-expected 0.1 percent in October as auto manufacturers scaled back following the end of the "cash for clunkers" government incentive program.
Investors are worried about the sustainability of the economic recovery when stimulus spending winds down.
"All of this adds up to concern in the markets today about the strength and durability of the recovery and will weigh on recent gains," said Jim Awad, managing director at Zephyr Management in New York.
WORRIES ON THE DOLLAR
The euro
The Fed -- the U.S. central bank -- has kept benchmark interest rates near zero and pumped hundreds of billions of dollars into the financial system to counter the worst recession in 70 years.
The dollar has been under pressure as the U.S. economy has lagged other economies in recovering from the global crisis.
For the dollar to reverse its long-term downtrend, analysts say China needs to take steps toward a more flexible currency regime, or the Fed has to signal imminent rate hikes.
"Neither of those prerequisites have been fulfilled, so the controlled grinding lower of the dollar will continue," said Johan Javeus, strategist at SEB in Stockholm.
U.S. Treasury debt prices edged higher, pushing 30-year
bond
The FTSEurofirst 300 <.FTEU3> index of top European shares ended 0.4 percent lower at 1,030. The index is up 24 percent in 2009.
Emerging stocks market <.MSCIEF> fell 0.21 percent. Japan's Nikkei stock average <.N225> fell 0.6 percent on Tuesday, as Tokyo market players said a host of domestic factors, including economic uncertainty amid renewed talk of deflation and the sense that government initiative on this is lacking, kept Japanese shares under pressure.
(Editing by Kenneth Barry)