GLOBAL MARKETS-Stocks fall on earnings outlook, dollar eases
* Report German banks face fines also weighs
* Dollar slips versus yen on equity sentiment
* Crude oil falls as geopolitical tensions ease (Updates U.S., European markets)
By Herbert Lash
NEW YORK, July 8 (Reuters) - The dollar eased and global equity markets fell on Tuesday as investors stepped back ahead of second-quarter earnings reports and after successive record highs last week for several major stock indices.
Media reports of new U.S. fines for banks and dimming prospects that the European Central Bank will launch an asset- purchase program weighed on sentiment in Europe, as did German imports and exports that dropped more than expected in May.
The earnings season is just getting under way, and estimates have been coming down as they typically do prior to the release of results.
"It's all about earnings," Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Massachusetts said. "It's just people pulling back, pulling their heads in a little bit and saying 'Wait a minute, maybe we got a little ahead of ourselves, let's see what the news actually says.'"
MSCI's ACWI fell 0.71 percent to 428.78, while the pan-European FTSEurofirst 300 index closed down 1.3 percent at 1,363.46 points.
The Dow Jones industrial average fell 122.48 points, or 0.72 percent, to 16,901.73. The S&P 500 lost 14.71 points, or 0.74 percent, to 1,962.94 and the Nasdaq Composite dropped 64.56 points, or 1.45 percent, to 4,386.97.
European equity indexes fell for a third consecutive day on reports Germany's largest lenders were negotiating a settlement with U.S. authorities over their dealings with countries blacklisted by Washington. The talks follow a huge fine for French lender BNP Paribas.
The dollar fell against the Japanese yen as long-dated Treasuries yields dropped for a second day, with investors wary of riskier assets as the U.S. earnings season began.
Safety buying of long-dated Treasuries is seen limiting dollar strength, at least in the near term. Three straight days of record closing highs for the S&P 500, the Dow and MSCI's all-country world index tamped down investor enthusiasm.
"We've seen a bit of risk aversion in the market and the tendency for yields to fall in the U.S. and the dollar to fall in sync with it," said Sebastien Galy, senior foreign exchange analyst at Societe Generale in New York. "It's driven by equities."
The ECB has made unprecedented policy moves in recent months to stimulate bank lending and revive the euro zone economy.
But late on Monday, ECB Executive Board member Sabine Lautenschlaeger showed the strength of opposition in some quarters to a program of asset purchases, which she said should be a last resort.
The dollar fell 0.27 percent against the yen to 101.54 yen. The euro rose 0.01 percent to $1.3606.
The 10-year U.S. Treasury note rose 15/32 in price to yield 2.5612 percent.
Oil prices extended their recent decline as events in Iraq and Ukraine have so far not led to serious disruption in flows. Brent fell $1.25 to $108.99 a barrel and U.S. oil lost 35 cents to $103.18 a barrel. (Additional reporting by John Geddie in London, Reporting by Herbert Lash; Editing by Meredith Mazzilli)
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