By Herbert Lash

NEW YORK (Reuters) – The dollar resumed its fall on Monday after its steepest weekly drop in 3-1/2 years, driving up oil prices and U.S. stocks after the Federal Reserve indicated last week that an expected rate hike is likely to come later rather than sooner.

U.S. energy stocks were among the biggest gainers on Wall Street as crude prices rebounded on the weaker dollar. The euro rose 1 percent and the dollar index, which measures the greenback versus six other major currencies, lost almost as much.

Gold steadied after a three-day rally lifted it to a two-week high, while copper prices in London hit their highest point since Jan. 9. A weaker dollar boosts the purchasing power of commodity buyers paying with other currencies.

Traders and investors are focused on when the Fed will tighten policy, most likely in September or October.

“The market has been in a back-and-forth motion for the last couple of weeks, caught between the potential for rising interest rates and its impact on the dollar and the feeling by investors that the economy is gaining some strength,” said Rick Meckler, president of hedge fund LibertyView Capital Management in Jersey City, New Jersey.

However, equity traders are “maybe a little bit too focused” on the dollar’s moves, while the impact a stronger greenback has on corporate earnings is not entirely clear, Meckler said.

MSCI’s all-country world index, a measure of equity performance in 46 countries, rose 0.38 percent.

The Dow Jones industrial average was up 57.32 points, or 0.32 percent, at 18,184.97. The Standard & Poor’s 500 Index was up 4.71 points, or 0.22 percent, at 2,112.81. The Nasdaq Composite Index was down 1.61 points, or 0.03 percent, at 5,024.81.

European shares slid from multi-year highs as a new bout of worries concerning Greece’s debt negotiations led investors to book profits on the equity market’s solid start to 2015.

The pan-European FTSEurofirst 300 index of top regional shares was down 0.7 percent at 1,599.62. Germany’s DAX, which hit a record high last week, shed 1.2 percent, yet is still up 21 percent so far this year.

U.S. Treasuries prices rose amid Greek-inspired investor anxiety and talks about the terms of a 240-billion-euro bailout for the cash-strapped country.

Benchmark 10-year Treasuries notes were up 2/32 in price to yield 1.9372 percent.

The euro strengthened against the dollar despite comments by European Central Bank President Mario Draghi on the bank’s bond-buying stimulus plan, which tends weaken the single currency.

The euro was last up 1.04 percent against the dollar at $ 1.0932, not far from a nearly two-week high of $ 1.10625 hit last week. The dollar was last down 0.37 percent against the Japanese yen at 119.59 yen.

The dollar index fell 0.52 percent to 97.402.

Oil rose to almost $ 56 a barrel as a weaker dollar offset concerns over the global oversupply after Saudi Arabia indicated it was pumping near a record high of 10 million barrels per day.

Brent crude oil futures traded up 31 cents at $ 55.63 a barrel. U.S. crude was up 16 cents at $ 46.73.

(Reporting by Herb Lash; Editing by Dan Grebler)