By Dan Strumpf 

U.S. stocks pared gains in afternoon trading, weighed by sliding shares of telecommunications companies, as investors looked ahead to a busy week of economic data.

The Dow Jones Industrial Average lost two points, or 0.1%, to 17808, reversing an early advance. The S&P 500 index tacked on four points, or 0.2%, to 2067. The Nasdaq Composite Index added 32 points, or 0.7%, to 4745.

A decline in telecommunications shares weighed on the Dow, with Verizon Communications Inc. shedding 1.5% after Citigroup Inc. analysts downgraded the stock. Fellow Dow component AT&T lost 1.7%.

Despite those declines, traders reported subdued activity given the coming Thanksgiving Day holiday. The meeting of the Organization of the Petroleum Exporting Countries and early readings on retailers' Black Friday results could give some direction to stocks later in the week, they said.

The pan-European Stoxx Europe 600 index rose 0.1%, getting a second-day lift after European Central Bank President Mario Draghi on Friday said it was necessary to raise inflation in the eurozone "without delay." Those remarks were widely interpreted as a sign that the ECB could take further easing action to fight ultralow inflation.

Elsewhere in the market, Dow component United Technologies fell 1.1% after the industrial conglomerate's chief executive unexpectedly stepped down.

Chinese and Hong Kong stocks rallied in response to the surprise interest-rate cut from the People's Bank of China, which was announced Friday after most Asian stock markets had closed. The cut was China's first to borrowing costs in more than two years and boosted optimism about the growth outlook for the world's second-biggest economy.

"China is recognizing that their growth rate is slowing, and they're doing what they can to combat that through monetary policy," said Michael Farr, president of Farr, Miller & Washington, which manages about $1.1 billion. "Europe to me is beginning to face...what looks like a reasonably certain recession, and Draghi keeps stepping up to the plate."

Investors expect measured gains in stocks through the remainder of the year, boosted by easy-money policies globally and signs of steady economic improvement in the U.S. The Dow has gained nearly 11% and the S&P is up more than 14% over the last 12 months. While the Fed is eyeing an increase in interest rates, other major central banks are accelerating easing actions as they fight slowing growth.

Mr. Farr said he has been looking to take profits on winning stocks in his portfolio following strong gains this year, but he said finding inexpensive stocks to take their place is a challenge. "I can't find stuff that's cheap enough to buy," he said. "I'm really struggling to stay invested."

Demand for haven U.S. government debt declined. The yield on the 10-year Treasury note, which moves inversely with its price, rose to 2.322%.

In economic news, the Federal Reserve Bank of Dallas reported solid factory activity this month. Later this week, investors will watch for the second reading on third-quarter gross domestic product, a report on consumer spending for October and the Federal Reserve's preferred gauge of inflation.

"We've been trading on macro data points lately," said Brian Fenske, head of sales trading at brokerage firm ITG. "Post earnings, we revert back to macro data points, and that's what's happening."

Investors are also likely to keep a close eye on a meeting of OPEC set for Thursday for signs of how the cartel plans to respond to the steep slide in oil prices. Tumbling crude prices have knocked shares of U.S. energy companies in recent months.

In commodity markets, crude-oil futures turned higher, rising 0.4% to $76.78 a barrel. Gold futures edged higher to $1197.90 an ounce.

Deal news attracted attention on Monday. Reinsurance firm RenaissanceRe Holdings Ltd. agreed to buy Platinum Underwriters Holdings Ltd. in a stock-and-cash deal worth more than $1.9 billion. The deal's per-share price of $76 represents a 24% premium over Platinum's closing price on Friday. Shares of RenaissanceRe fell 2.1% and those of Platinum Underwriters surged 21%.

Drug maker BioMarin Pharmaceutical Inc. said it agreed to pay up to $840 million to buy Dutch company Prosensa Holding NV. Prosensa is a biopharmaceutical company that currently has no market products. The deal represents a bet that Prosensa will get regulatory approval for a muscular dystrophy drug. Shares of BioMarin gained 1.9%.

Write to Dan Strumpf at daniel.strumpf@wsj.com

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