* Wall Street mixed on foreclosure fear, new stimulus
* Fed's Bernanke cements view more stimulus coming
* Dollar rebounds after touching fresh 10-month low
By Daniel Bases
NEW YORK, Oct 15 (Reuters) - Wall Street pared back gains on Friday as a widening U.S. foreclosure crisis undermined an initial boost from U.S. Federal Reserve Chairman Ben Bernanke who said more monetary stimulus was needed.
European share prices turned down in late trade while Japanese stocks closed lower on profit taking and weak financial shares in sympathy with the foreclosure crisis.
"The (financial) sector is under pressure with all this uncertainty surrounding the foreclosure issue and whether or not the banks could move houses off their books and move on," said John Canally, investment strategist and economist for LPL Financial in Boston.
"This has been an issue that we kept under the rug for a while but it is now brought back to the front," he said.
All 50 U.S. states have started a joint investigation of the mortgage industry, focusing on allegations that for years banks have not reviewed documents properly or have submitted false statements to evict delinquent borrowers. [ID:nLDE69E078]
The U.S. dollar had a reprieve from a sell-off that has taken it to 10-month lows against a basket of currencies and an 8-1/2 month nadir against the euro.
However commodity prices remained weak despite the currency market gyrations. Gold fell from record highs and crude oil prices slipped.
In mid-morning trade, U.S. stocks traded mixed. The Dow Jones industrial average <.DJI> fell 38.67 points, or 0.35 percent, at 11,055.90. The Standard & Poor's 500 Index <.SPX> slipped 1.43 points, or 0.12 percent, at 1,172.38.
The Nasdaq Composite Index <.IXIC> however rose 10.91
points, or 0.45 percent, at 2,446.29, aided by a 10 percent
gain in Google
The KBW Bank share index <.BKX> fell 2.42 percent as concerns a growing crisis over shoddy U.S. real estate foreclosure documents deepens, putting at risk a still fragile economy, let alone housing market. [ID:nLDE69E078]
The FTSEurofirst 300 <.FTEU3> index of top European shares was down 0.06 percent at 1,084.01 in late session trade.
The MSCI All-Country World equity index <.MIWD00000PUS> fell 0.42 percent to 316.32 after it had hit the year's high of 319.45 on Thursday, its best showing since shortly after the collapse of U.S. investment bank Lehman Brothers in September 2008.
BERNANKE
U.S. inflation slowed unexpectedly in September despite a pick-up in retail sales, while U.S. consumer sentiment dropped in early October to its weakest point since July. The data added weight to the Fed Chairman's view that an environment of high unemployment and low inflation made "a case for further action." [ID:nN15182948]
Stocks and commodities have rallied on the expectation that the Fed will pump more stimulus into the U.S. economy when it meets Nov. 2-3.
At the same time yields on U.S. Treasuries have plunged since April as fears the lackluster recovery would prompt more stimulus and stoke inflation, the bane of the fixed income asset class. On Friday, Treasuries were mixed and European government debt prices weakened.
"Everything we've seen economically and from officials points to weak dollar. The only question left is the size and scope of (quantitative easing)," said Boris Schlossberg, director of research at GFT in New York.
CURRENCIES
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, reversed course to rise 0.22 percent to 76.815 <.DXY>.
The euro
The dollar cut its losses against the yen to trade down
0.11 percent at 81.35
It hit a 15-year low of 80.88 yen on Thursday, only about 1 yen above its record low of 79.75 yen set in April 1995, and the market remains nervous about the possibility of more Japanese intervention to curb yen strength.
Currency traders focused on the U.S. Treasury Department's semi-annual report on currency practices, particularly whether it will label China as a currency manipulator, a move that could throw a wrench into Sino-U.S. relations. [ID:nN14134313]
U.S. light sweet crude oil