* Investors assess equity outlook after 2013 rally
* Euro dips ahead of ECB meeting on Thursday
* Yen near 3-year low vs dollar, euro
By Herbert Lash and Wanfeng Zhou
NEW YORK, Feb 6 U.S. and European stocks slipped
on Wednesday as investors paused after a robust recent rally,
while the euro fell ahead of a European Central Bank meeting
that could reveal concerns about the currency's strength.
Investors awaited fresh incentives to push markets higher,
after recent rallies that took the S&P 500 to five-year highs
and euro zone equities to 1-1/2-year peaks.
Disagreement between Germany and France over the exchange
rate for the euro stoked concern about stability in the euro
zone, adding to uncertainty over the outcome of upcoming Italian
elections and a corruption scandal in Spain.
The ECB is widely forecast to keep rates at a record low
0.75 percent when it meets on Thursday, but policymakers may
examine whether the strength of the euro is undermining a
recovery in troubled economies.
"Overall, we believe that the next near-term market dip
should provide an opportunity to buy stocks ahead of rallies
higher in the coming months, but we are skeptical about the
long-term sustainability of these gains due to the maturing age
of the bull market," said Ari Wald, equity research analyst at
C&Co\PrinceRidge in New York.
The Dow Jones industrial average fell 36.97 points,
or 0.26 percent, to 13,942.33. The Standard & Poor's 500 Index
lost 5.05 points, or 0.33 percent, to 1,506.24. The
Nasdaq Composite Index dipped 13.94 points, or 0.44
percent, to 3,157.64.
The S&P 500 has gained 6 percent so far this year, lifting
the benchmark equity index to highs last seen in December 2007.
The Dow briefly climbed above 14,000 for the first time in more
than five years during the rally.
The EuroSTOXX 50 gauge of euro zone blue chips fell 1.3
percent to 2,617.35 points, its weakest finish since
early December and further retreating from 1-1/2 year peaks of
2,754.80 points set last week.
The pan-European FTSEurofirst slipped 0.2 percent to
1,152.12 points, its losses tempered by a solid
performance from UK blue chips.
MSCI's all-country world equity index was
little changed at 354.83.
After France complained about the euro's level, German
Chancellor Angela Merkel's spokesman said the currency was not
overvalued and that competitiveness could not be achieved via
The euro was 0.5 percent lower against the dollar at
$1.3515 and lost 0.8 percent to 126.11 yen.
"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 0.3 percent to 93.31.
The yen's decline spurred Japan's Nikkei index to
climb to its highest in more than four years.
Brent crude oil futures recovered from early losses. Brent
futures rose 13 cents to $116.65 a barrel. U.S. light
sweet crude oil was down 8 cents at $96.57 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.
Political uncertainty in Europe and a retreat in equities
boosted safe-haven U.S. government debt. The benchmark 10-year
U.S. Treasury note was up 11/32 in price to yield
Bond prices climbed also as traders sought to profit from
the Federal Reserve's latest purchase of Treasuries, which was
part its $44 billion monthly program aimed at lowering borrowing
costs and unemployment.
"There are still a lot of possible disruptive currents
coming from Europe," said Lou Brien, market strategist at DRW
Trading in Chicago. "The problems there have not gone away, but
the market had just ignored them until this week."