By Herbert Lash

NEW YORK (Reuters) – U.S. stocks slipped from all-time highs on Monday, pulled lower by a sharp drop in crude oil prices, while European shares rallied to fresh seven-year highs on last week’s conditional financial rescue for Greece.

Yields on low-rated euro zone government bonds fell on relief an agreement was reached late Friday as it eased concerns that Greece would leave the euro, even though it merely buys time for Athens to seek a long-term deal with Europe.

The Pan-European FTSEurofirst 300 index (.FTEU3) surged to highs last seen in December 2007 and Germany’s DAX equity index (.GDAXI) set a record closing high, pushing gains so far this year to almost 14 percent.

Britain’s FTSE 100 index (.FTSE) was the only major index in Europe to close lower, albeit slightly, after HSBC (HSBA.L) reported a 17 percent drop in annual profit. The bank’s shares fell 4.6 percent.

Oil weakened on rising inventories, which have pressured crude prices and hit U.S. energy shares, a major component of the U.S. benchmark S&P 500 index. The S&P 500 and the Dow industrials closed at all-time highs on Friday.

“What investors seem concerned with is that oil isn’t finding a base,” said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.

“Investors like stability, orderly rises and declines, and things like oil dropping by the types of moves it’s been dropping and the volatility it creates is just a negative for some market participants,” he said.

On Wall Street, the Dow Jones industrial average (.DJI) was down 50.09 points, or 0.28 percent, at 18,090.35. The Standard & Poor’s 500 Index (.SPX) was down 4.80 points, or 0.23 percent, at 2,105.50. The Nasdaq Composite Index (.IXIC) was down 4.89 points, or 0.10 percent, at 4,951.07.

MSCI’s all-country world index , a measure of stock performance in 46 countries, slipped 0.07 percent, while the FTSEurofirst 300 index (.FTEU3) rose closed up 0.65 percent at 1,535.08.

Brent crude (LCOc1) fell $ 1.09 to $ 59.13 a barrel. Benchmark U.S. WTI crude (CLc1) for April delivery fell $ 1.58 to $ 49.23.

The dollar rose against most currencies as investors await Federal Reserve Chair Janet Yellen’s testimony on Tuesday to a Senate panel for clues on when the U.S. central bank will boost interest rates.

The euro retreated on lingering doubts over whether the Greek accord will lead to a deal to keep Athens solvent.

“The Greece debt deal has been mildly positive, but it’s difficult to determine what is the next move yet before Yellen’s testimony tomorrow,” said Lane Newman, director of foreign exchange at ING Capital Markets in New York.

The dollar index (.DXY), a measure of the greenback versus currencies of major U.S. trading partners, rose 0.4 percent to 94.610.

The euro was down 0.35 percent against the dollar at $ 1.1338 (EUR=EBS). The dollar dipped 0.11 percent against the yen, last trading at 118.88 yen (JPY=EBS).

U.S. Treasuries prices rose on expectations Yellen will take a dovish tone on monetary policy and as traders viewed the latest drop in oil prices as a sign of deflation that will underpin a cautious Fed.

“We’re seeing abating inflationary trends,” said Justin Hoogendoorn, fixed income strategist at BMO Capital Markets in Chicago. “It makes it more difficult for the Fed to argue that they should be hiking rates.”

Benchmark 10-year notes rose 19/32 in price to yield 2.0644 percent.

(Reporting by Herbert Lash; Editing by Dan Grebler)