* S&P down 0.2 pct, European stocks off 0.4 pct
* Euro/dollar flat, dollar index at seven-month lows
* German Bund futures up 16 ticks
By Ryan Vlastelica
NEW YORK, Sept 17 (Reuters) - Stocks in Europe and the United States slipped o n M onday as investors took pause from recent gains and turned their focus to the economic outlook and Europe's debt crisis.
Spanish bond yields crept up above 6 percent while German Bund prices rose 16 ticks. The move in Bunds follows steep falls on Friday, when markets across the world reacted to the U.S. Federal Reserve saying it would pump $40 billion a month into the economy until the jobs market improves.
Wall Street closed on Friday at its highest in nearly five years on the news, contributing to the modest losses on Monday.
"We had a couple of days of pretty strong runs," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. "It looks like a little bit of profit-taking."
The Dow Jones industrial average was down 21.24 points, or 0.16 percent, at 13,572.13. The Standard & Poor's 500 Index was down 2.27 points, or 0.15 percent, at 1,463.50. The Nasdaq Composite Index was down 7.82 points, or 0.25 percent, at 3,176.13.
The FTSEurofirst 300 index of leading European stocks was down 0.3 percent at 1,116.69 points, pulling back from a 14-month high hit in the previous session. World stocks fell 0.21 percent.
Asian stocks were generally higher overnight, with the MSCI Asia ex-Japan index hitting a 4-1/2 month high. Tokyo markets were closed, although tensions between Japan and China over disputed territory bubbled in the background.
"There is still good upside potential for stocks as we are re-pricing the 'non-break-up' of the euro zone. We've just started to realize all the downside that came from the debt crisis," said Louis Capital Markets trader Jerome Troin-Lajous.
"Now, the main signal we need that would fuel this rally won't be coming from the economic outlook, it will come from the investment flows. A lot of foreign investors have been strongly 'underweight' European stocks and should start to switch out of bonds and out of U.S. equities and into European stocks."
Commodities, including oil, gold and copper - all of which rallied last week - leveled off on Monday.
Fund flow data from EPFR showed Europe equity funds posted their biggest net inflows since early May in the week to September 12 as the ECB action encouraged more investors to take on equity risk and move out of conservative debt.
While risk markets should get a boost from the U.S. stimulus plan, organic growth is ultimately needed to sustain a recovery and there are concerns about the economy's ability to generate such growth amid macroeconomic headwinds.
"The Federal Reserve's decision to engage in an open-ended purchase program reinforces the carry trade in the U.S. dollar and risk assets. It is unlikely to produce meaningful change in economic growth, in our view," Jefferies analysts said in a note.
The single currency eased in European trade but traded flat against the dollar after weaker-than-expected U.S. data.
"We are due some consolidation. We could trade below $1.30 again but will see $1.35 by year-end. It's a combination of improvements in Europe and deteriorating dollar sentiment," said Daragh Maher, currency strategist at HSBC.
The greenback is expected to remain under pressure in the coming weeks as the effects of the U.S. stimulus plan work their way through the system.
It remained near a seven-month low against a basket of key currencies on Monday and extended losses versus the yen after the Empire State new orders index hit its lowest since November 2010.
The dollar's drop in recent weeks has been contrasted by the euro, which has been the strongest-performing major global currency.
The rise has been supported by the ECB's plan to help lower the borrowing costs of indebted euro zone countries, if and when the countries concerned - chiefly Spain - ask for that help.
ECB member Luc Coene and French Finance Minister Pierre Moscovici are both due to speak in London starting at 1500 GMT and could provide fresh information following policymaker meetings in Cyprus over the weekend.
The reversal of Friday's trend in currencies and stocks also fed through into the bond market, with German Bunds, up 16 ticks.
The benchmark 10-year U.S. Treasury note was up 11/32, the yield at 1.831 percent.
"A lot of good news is priced in and now the market is pondering whether or when Spain might require a bailout," said Rabobank rate strategist Richard McGuire. "The realization is dawning it might not be rushing."
Reflecting the uncertainty, Spanish 10-year bond yields rose back above 6 percent. Spanish Prime Minister Mariano Rajoy has said he would not accept a rescue that dictated spending cuts.
"The market has priced in an actual bailout and the longer Spain prevaricates, the greater the risk the market will strong-arm them into accepting a support package," McGuire said.