NEW YORK (CNN/Money) - Japan led world stock markets lower in generally quiet trading Monday, while oil and gold prices inched higher on fresh concerns about a possible war with Iraq and the general strike in Venezuela.

Volume was light in many countries as U.S. financial markets were closed for the Martin Luther King Jr. holiday.

Stocks fell mostly lower in Europe and the Americas, while prices were mixed in Asia.

In London, spot gold was quoted at $356.30 an ounce, up from New York's last quoted price of $356.80 Friday but off this month's near six-year high of $358.50.

"I think we will continue to trade around $348 to $358 for the moment, until it becomes clear what will happen in the Gulf region," said James Moore, metals analyst at TheBullionDesk.com, of the gold market outlook.

Firmer oil prices also boosted gold prices as investors saw potentially higher inflation from rising energy prices.

Light crude added 15 cents to $32.96 a barrel after the United States said time was running out for Baghdad to prove compliance with disarmament resolutions. U.S. crude closed at $32.96 in New York on Friday.

The dollar weakened to a new three-year low Monday after U.S. officials reiterated their intent to take action against Iraq if it fails to disarm itself of weapons of mass destruction.

Around 3:00 p.m. ET, the euro was trading around $1.068, up from Friday's close of $1.067, and the dollar purchased ¥117.93 Monday, up slightly from ¥117.40 at last week's close.

"Iraq is still the focus. It seems most Fridays the dollar finishes on the lows because people are worried about some kind of attack over the weekend or some new news coming out, so no one wants to be long dollars," said Greg Schwake, vice president of foreign exchange at Commerzbank in New York.

Anticipation that the Bank of Japan may take advantage of thin trading conditions to sell the yen against the dollar lent support to the U.S. currency. Japanese officials have recently been warning on a daily basis that they are prepared to intervene to stem the yen's export-damaging strength.

In the equity markets, Japan's Nikkei fell 131.43 points, or 1.51 percent, to 8,558.82 Monday; traders credited the decline to a report on the failure of Tokyo-based hedge fund Eifuku with $300 million in assets. Elsewhere, in Hong Kong, the Hang Seng fell 62.57 points, or 0.65 percent, to 9,552.02, but Taiwan's Weighted index rose 43.25 points, or 0.9 percent, to close at 4,951.03.

In Europe, defense contractor BAE Systems pulled London's FTSE down 42 points, or 1.1 percent, to 3,778.60 on reports that the firm may lose out on a aircraft carrier contract.

A lackluster outlook from chipmaker Infineon (IFX: Research, Estimates) pressured stocks in Germany as the DAX fell 25.27 points, or 0.8 percent, to 2,893.55 and France's CAC 40 dropped 36.86 points, or 1.2 percent, to 3,020.07.

War fears also pressured markets in Brazil, as the Bovespa closed 0.2 percent lower at 11,648.38, and Mexico's IPC shed 0.7 percent to end at 6,161.12.

Toronto stocks also finished 0.2 percent lower at 6,740.37, failing to keep earlier gains.