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NEW YORK (Reuters) - Oil prices fell more than 3 percent on supply worries, while U.S. Treasuries rose and stocks flattened on Monday as markets awaited more clarity later this week from the Federal Reserve on when it might raise U.S. interest rates.
An upbeat assessment of the U.S. economy from Fed Vice Chairman Stanley Fischer on Sunday was viewed as raising the prospect of Fed Chair Janet Yellen flagging a rate rise at a meeting with world central bankers on Friday.
Treasury yields fell ahead of Yellen's speech, which will be scrutinized by investors.
"Everyone's kind of waiting on Yellen," said Lou Brien, market strategist at DRW Trading in Chicago.
Benchmark 10-year notes US10YT=RR gained 12/32 in price to yield 1.54 percent, down from 1.58 percent late on Friday. Bond yields move inversely to prices.
Oil prices faltered as China ramped up exports of refined products, with its July diesel and gasoline exports soaring 181.8 percent and 145.2 percent, respectively, from the same month last year, putting pressure on refined product margins.
U.S. oil producers also added rigs for an eighth straight week and the potential emerged for increased exports from Iraq and Nigeria.[O/R]
Brent crude LCOV6 settled down $1.72, or 3.4 percent, at $49.16 a barrel. It hit a two-month high of $51.22 on Friday.
U.S. West Texas Intermediate (WTI) crude's front-month contract, September CLU6, closed down $1.47, or 3 percent, at $47.05 before expiring.
Because of the production and storage overhang in fuel markets, Barclays said this month's 20 percent price rally is unwarranted and that oil prices of $50 or higher are unsustainable.
"Oil prices will likely experience another short-term dip in the coming weeks," it said.
U.S. stocks bounced around during Monday's trading session but ended flat. The drop in oil prices weighed on the energy sector but was offset with a strong showing by biotech.
The Dow Jones industrial average .DJI fell 23.15 points, or 0.12 percent, to 18,529.42, the S&P 500 .SPX lost 1.23 points, or 0.06 percent, to 2,182.64 and the Nasdaq Composite .IXIC added 6.23 points, or 0.12 percent, to 5,244.60.
"It's oil and then we've got Jackson Hole hanging over us, and there is always some surprise that comes out of Jackson Hole," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.
The U.S. dollar was mostly flat against a basket of major currencies .DXY amid hesitation to make bets ahead of Yellen's Friday speech.
European stocks initially slipped but recouped losses to rise 0.09 percent, getting a temporary boost in early trading after Syngenta's proposed takeover by ChemChina was approved by U.S. regulators.
Gold hit a two-week low and silver fell to its lowest in seven weeks on talk of possible U.S. rate hikes.
Spot gold XAU= dropped 0.22 percent to $1,338.27 per ounce after hitting a session low of $1331.35, its lowest since Aug. 9. Silver XAG= hit a seven-week low of $18.77 an ounce and was later down 2.2 percent at $18.865.
Copper and nickel prices also tumbled to fresh lows.
"Metals are trading on the dollar and the latest copper export data from China doesn't help," Commerzbank analyst Eugen Weinberg said.
For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
Reporting by Hilary Russ in New York; Additional reporting by Ahmad Ghaddar and Jan Harvey in London; Barani Krishnan, Sam Forgione, Karen Brettell, Devika Krishna Kumar and Chuck Mikolajczak in New York; Editing by Dan Grebler