* European stocks dip, Euro off 10-day low after solid ECB bank lending data
* China stocks hit near 2-month as recovery continues
* Loonie steadies after surprise election win for Liberals
* China uncertainty weigh on metals
By Marc Jones
LONDON, Oct 20 (Reuters) - European shares fell for the first time in four days on Tuesday and the euro kicked away from a 10-day low as solid euro zone bank lending data cooled expectations of another jolt of European Central Bank stimulus this week.
The 0.5 percent decline in the pan-European FTSEurofirst 300 index and what looked set to be a subdued start for Wall Street took the shine off after recovering Chinese stock markets touched a nearly two-month high.
The dollar meanwhile fell for the first time in four days as the euro and the Canadian dollar, which had been knocked overnight by a shock majority election victory for the Liberal party, both rebounded.
The quarterly lending data from the ECB ahead of its meeting on Thursday was the principal driver for the euro's bounce, and for the reversal in Europe's stocks and bonds after what had been a positive start.
It dampened bets the euro zone's central bank will ramp up its 1 trillion euro asset purchase programme, this week at least, showing that euro zone banks had loosened their lending standards more than expected over the last few months despite the recent global market volatility.
Companies' demand for loans also rose, albeit by less than expected, and a "further considerable increase" was predicted in the coming months, the ECB said, as well as more easing of banks' lending rules.
"Anything that continues to send the signal that the impact of QE is still coming through is going to support the (ECB) hawks and their wait-and-see view," said Gilles Moec, Europe Economist at Bank of America Merrill Lynch.
"I'm just worried that we are looking at everything through the rear view mirror ... I'm not saying that QE is not working, but the issue is that since the ECB decided to do QE things have changed in the world, and not for the better."
The data came after ECB Governing Council member Christian Noyer, who is the bank's most experienced voice, said late on Monday that the bank's quantitative easing programme was "well calibrated" and did not need to be adjusted.
Commodity markets were also trying taking advantage of the weaker dollar following a tough start to the week, with mixed success.
Brent crude was a touch higher at $48.68, having dropped $1.85 a barrel, or 3.7 percent, on Monday, while U.S. light crude was up 20 cents at $46.09 after a similar fall.
Copper, nickel and aluminium however were heading for their third straight days of falls driven by persistent concerns about lacklustre global demand and oversupply.
The Canadian dollar, known as the loonie, steadied at C$1.3020 to the dollar after slumping almost 1 percent overnight after the Liberal party's shock outright election victory. The Liberals have promised more public spending and tougher environmental rules -- Canada has one of the world's 'dirtiest' oil industries.
"It's a big surprise that it's a majority government and of course it's a Liberal government," said John Hardy, head of FX strategy at Saxo bank in Copenhagen, who didn't expect the CAD to hold up for long.
"The dollar is just meandering about now so I think the market just feels very uncertain about what to do in the current set of circumstances (regarding the Federal Reserve's next move) and is probably waiting passively for the ECB on Thursday too."
There could be clues to the Fed's intentions later with chair Janet Yellen due to speak. U.S. investors were already digesting the latest barrage of quarterly company results in what has been a jittery start to earnings season.
After more disappointment on Monday from Morgan Stanley, Exxon and IBM , mobile phone giant Verizon offered some solace, reporting a 5 percent rise in revenues, albeit aided by heavy promotions.
In Asia overnight, MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.35 percent although Shanghai shares gained on hopes an imminent Chinese five-year economic plan will include more support measures.
It was their fourth straight day of gains but came amid an otherwise lacklustre performance by emerging markets.
China's yuan "ticks all the right boxes" for inclusion in the International Monetary Fund's SDR list of global reserve currencies, the biggest international bank in China, HSBC, said in a new report.
The United States had also called on China on Monday to allow its currency to appreciate further as a crucial support to the world's second-biggest economy in rebalancing its economy. (Additional reporting by Patrick Graham in London; Editing by Catherine Evans)