* Investors assess equity outlook after this year's rally
* Euro dips ahead of ECB meeting on Thursday
* Yen near 3-year low vs dollar, euro over BOJ leadership
By Herbert Lash and Wanfeng Zhou
NEW YORK, Feb 6 U.S. and world stock markets paused for breath on Wednesday after a rally that drove the S&P 500 to five-year highs, while the euro slipped ahead of a European Central Bank meeting that could reveal concerns about the currency's strength.
European equities sank to two-month lows after a run of weak corporate earnings and signs of disagreement between Germany and France over the exchange rate for the euro dented sentiment.
The ECB is widely forecast to keep rates at a record low 0.75 percent when it meets on Thursday, but the euro's strength may lead policymakers to examine whether the strong currency is undermining recovery in troubled economies like Spain.
On Wall Street, the S&P 500 has gained 6 percent so far this year, lifting the benchmark equity index to highs last seen in December 2007 but giving investors pause. The Dow briefly climbed above 14,000 for the first time in more than five years during the rally.
"You knew a correction was coming," said Gordon Charlop, managing director at Rosenblatt Securities in New York. "The question was whether they were going to tease you and get it close and then start selling it off or get it up to 14,000 and then start to make a move to the sell side," he said.
At midday in New York, the Dow Jones industrial average was up 6.15 points, or 0.04 percent, at 13,985.45. The Standard & Poor's 500 Index was up 0.79 points, or 0.05 percent, at 1,512.08. The Nasdaq Composite Index was up 2.24 points, or 0.07 percent, at 3,173.82.
The FTSEurofirst 300 was down 0.2 percent at 1,152.12. MSCI's all-country world equity index rose 0.15 percent to 355.50.
After France complained about the euro's level, German Chancellor Angela Merkel's spokesman said the currency was not over-valued and that competitiveness could not be achieved via exchange rates.
Against the dollar, the euro was 0.4 percent lower at $1.3530.
"The focus is speculation over tomorrow's ECB statement and President Draghi's press conference," said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto. "We expect President Draghi to sound notably cautious and EUR to weaken on the back of it."
Japan's yen, at the center of concerns that some countries are trying to devalue their currencies to boost growth, hit a near-three-year low earlier in the day on the view a new Bank of Japan governor will ease policy aggressively once in office.
The yen fell 0.10 percent to 93.54.
The yen's decline helped spur a huge gain in Japan's Nikkei index to its highest in more than four years.
Crude oil futures recovered from early losses. Brent futures rose 45 cents to $116.97 a barrel. U.S. light sweet crude oil gained 19 cents to $96.83 a barrel.
U.S. government debt prices rose on weaker stocks, while nagging worries about possible political shake-ups in Italy and Spain also rekindled demand for safe-haven bonds.
The benchmark 10-year U.S. Treasury note was up 3/32 in price to yield 1.9027 percent.