NEW YORK (Reuters) - U.S. shares pared losses to end slightly lower on Friday after Republicans pulled their bill to overhaul the U.S. healthcare system due to a shortage of votes, dealing a blow to U.S. President Donald Trump, while European shares fell ahead of the decision.

The benchmark U.S. S&P 500 stock index ended a touch lower after falling as much as 0.4 percent earlier, before a House Republican leadership aide said the bill to dismantle Obamacare had been pulled by U.S. House Republican leadership. Traders were on tenterhooks during most of the session as they awaited the outcome of the vote.

European stocks slipped as caution prevailed ahead of the decision, with the FTSEurofirst 300 index of top European shares falling about 0.5 percent for the week.

But many analysts and investors have seen a failure of the bill as a catalyst to bring forward action on pro-growth policies such as tax reform, deregulation and infrastructure spending.

“The market is taking it as a positive that they are not pursuing something that looked like it was hitting a brick wall, and that means it’s more likely they can move on to other issues the market would like such as deregulation and lower taxes,” said Margaret Patel, senior portfolio manager at Wells Fargo Asset Management in Boston.

MSCI's all-country world equity index .MIWD00000PUS was last up 0.24 point, or 0.05 percent, at 447.72.

The Dow Jones Industrial Average .DJI closed down 59.86 points, or 0.29 percent, at 20,596.72. The S&P 500 .SPX closed down 1.98 points, or 0.08 percent, at 2,343.98. The Nasdaq Composite .IXIC ended 11.05 points higher, or 0.19 percent, at 5,828.74.

Slideshow ( 3 images )

Europe's broad FTSEurofirst 300 index .FTEU3 closed down 0.16 percent at 1,484.54.

The U.S. dollar index .DXY, which measures the greenback against a basket of six major rivals, hit a seven-week low of 99.527 before the healthcare decision but pared losses after the announcement and was last marginally higher at 99.765. [nL2N1H11DC]

“If this stronger dollar has legs, it depends on the next step,” said Paresh Upadhyaya, director of currency strategy at Pioneer Investments in Boston. “If there is a pivot to taxes from healthcare, the market has to see the plan.”

Safe-haven assets such as gold, U.S. Treasuries and the yen lost some shine after the decision. Spot gold prices pared gains to last trade little changed at $1,245.37 an ounce after hitting a more than three-week high on Thursday of $1,253.12.[nL2N1H11G1]

The dollar was last up 0.3 percent JPY= against the yen at 111.25 yen after touching a four-month low of 110.64 yen before the decision.

Benchmark 10-year U.S. Treasuries prices turned flat US10YT=RR after the decision, with their yields last at 2.418 percent after hitting a session low of 2.393 percent earlier.

Oil rose modestly in a spate of late-day activity, but fell on the week as concerns persisted over an excess of crude.[nL3N1H11U6]

Brent crude LCOc1 settled up 24 cents, or 0.47 percent, at $50.80 a barrel. U.S. crude CLc1 settled up 27 cents, or 0.57 percent, at $47.97.