The Collaborative International Dictionary of English v.0.48:

Dandle \Dan"dle\, v. t. [imp. & p. p. Dandled; p. pr. & vb. n.
   Dandling.] [Cf. G. d[aum]ndeln to trifly, dandle, OD. &
   Prov. G. danten, G. tand trifly, prattle; Scot. dandill,
   dander, to go about idly, to trifly.]
   1. To move up and down on one's knee or in one's arms, in
      affectionate play, as an infant.
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            Ye shall be dandled . . . upon her knees. --Is.?
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   2. To treat with fondness, as if a child; to fondle; to toy
      with; to pet.
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            They have put me in a silk gown and gaudy fool's
            cap; I as ashamed to be dandled thus. --Addison.
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            The book, thus dandled into popularity by bishops
            and good ladies, contained many pieces of nursery
            eloquence.                            --Jeffrey.
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   3. To play with; to put off or delay by trifles; to wheedle.
      [Obs.]
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            Captains do so dandle their doings, and dally in the
            service, as it they would not have the enemy
            subdued.                              --Spenser.
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WordNet (r) 3.0 (2006):

dandle
    v 1: move (a baby) up and down in one's arms or on one's knees
    2: pet; "the grandfather dandled the small child"