* S&P 500 index down 0.3 pct, European stocks off 0.4 pct
* Crude oil tumbles in volatile afternoon trading
* U.S. 10-year rises, Spanish yields above 6 pct
By Ryan Vlastelica
NEW YORK, Sept 17 (Reuters) - Stocks in the United States and Europe on Monday gave back some of last week's huge gains as investors began to question whether recent action by both the European Central Bank and Federal Reserve would be enough to revive global economic growth.
In the euro zone, Spanish and Italian bond yields rose while German bond yields fell. But the euro slipped from its near four-month highs reached in the wake of recent decisions by the ECB and the Fed to effectively become open-ended lenders of last resort.
Commodity prices fell, with crude oil prices tumbling about 3 percent in a late selloff and gold giving back some of last week's gains.
"Everyone is still reeling from last week - that is part of it," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco. "But on the other hand, it starts to become increasingly more difficult to pull the trigger on buy orders at these valuations."
The Dow Jones industrial average ended down 40.27 points, or 0.30 percent, at 13,553.10. The Standard & Poor's 500 Index was down 4.58 points, or 0.31 percent, at 1,461.19. The Nasdaq Composite Index lost 5.28 points, or 0.17 percent, at 3,178.67.
Wall Street stocks surged to nearly five-year highs last week on the Fed's decision to buy mortgage bonds indefinitely and support U.S. economic growth until unemployment falls.
The FTSEurofirst 300 index of leading European stocks closed down 0.3 percent, pulling back from a 14-month high hit in the previous session. World stocks fell 0.42 percent.
But 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.
"There is still good upside potential for stocks as we are re-pricing the 'non-breakup' 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 Brent crude, gold and copper - retreated on Monday after a rally last week.
Brent crude plunged more than $5 a barrel in a wave of late, high-volume selling before settling down $2.87 at $113.79. Many traders said the selloff appeared to have stemmed from a problem with an automated computer trading program.
While riskier markets should get a boost from the Fed 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 research note.
The euro accelerated losses against the dollar late in the session, changing hands at $1.3110, near the session low of $1.3082.
"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.
However, John Doyle, director of markets at Tempus Consulting in Washington, D.C., said traders remain wary of the single currency, given ongoing uncertainty about global growth and the euro zone debt crisis.
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 against the yen.
The dollar's drop in recent weeks has been in contrast to the euro, which has been the strongest-performing major global currency. Its rise has been supported by the ECB's plan to help lower borrowing costs of indebted euro zone countries, if and when those countries - chiefly Spain - formally request that help.
The reversal of Friday's trend in currencies and stocks also fed through into the bond market, with German Bunds, up 16 ticks.
In the U.S. Treasury market, the U.S. benchmark 10-year Treasury note was up 10/32 in price, the yield at 1.8345 percent.
Treasury Infation-Protected Securities, or TIPS, have rallied since the Fed began QE3 on Friday.
The yield premiums, or inflation breakeven rates, on regular Treasuries over TIPS jumped broadly. The 10-year TIPS breakeven rate, which gauges investors' inflation expectations, touched 2.64 percentage points on Friday, the highest since April 2011, according to Reuters data.
On Monday, the 10-year breakeven rate was 2.58 points.
"The 'reflation' trade is not going away," said Charles Comiskey, head of Treasury trading at Bank of Nova Scotia.