* World stocks slip after 5-session winning streak
* U.S. dollar index edges off 3-year trough
* Firmer dollar sends crude and copper lower
(Updates prices, adds comment, details, changes byline, dateline, previous LONDON)
By Wanfeng Zhou
NEW YORK, May 3 (Reuters) - Stocks on major markets fell on Tuesday as investors locked in profits after a five-session winning streak, while the U.S. dollar paused after a ten day slide and commodity prices mostly slipped also.
Robust corporate earnings in the United States and Europe have buoyed equities recently, though some investors say the market is reaching overbought levels. High commodity prices, sparked by a weak dollar and supply worries, have also raised concern about company margins.
The dollar edged off a three-year low against major currencies as sellling, based on loose U.S monetary policy, ran out of steam. The trend for a weaker dollar, however, remains intact, traders said.
"Some of the markets were getting a little overdone," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago. "Markets gets overbought, dollar is oversold -- yes. You've got a corrective bounce of the dollar coming, it's not a change in trend by any means."
World stocks measured by the MSCI All-Country World Index <.MIWD00000PUS> shed 0.7 percent after five sessions of gains, and the emerging share index <.MSCIEF> lost 1.5 percent to a two-week low.
The MSCI world gauge gained 3.9 percent last month, and is up about 7.5 percent so far this year.
U.S. stocks fell at the open. The Dow Jones industrial average <.DJI> was down 17.03 points, or 0.14 percent, at 12,787.99. The Standard & Poor's 500 Index <.SPX> slipped 3.69 points, or 0.27 percent, at 1,357.53. The Nasdaq Composite Index <.IXIC> was off 6.90 points, or 0.24 percent, at 2,856.93.
Nearly 80 percent of 339 S&P 500 <.SPX> companies that have so far reported first-quarter earnings have either beat or met analysts' forecasts, data from Thomson Reuters StarMine showed.
The FTSEurofirst 300 <.FTEU3> index of leading European shares dropped 0.7 percent, while Asia-Pacific shares excluding Japan <.MIAPJ0000PUS> fell 1.4 percent.
Of the 98 European companies that have reported quarterly results, 56 percent of them either beat or met expectations.
"After the strong performance of equity markets over the last months we are expecting to see a flattening in the market in the coming months," said Patrik Lang, head of equity research at Julius Baer.
"Some of the key forward-looking (economic) indicators are showing weaknesses meaning that the prospect and chance of equity growth over the coming months is limited."
Lang recommended investors should cut their exposure to cyclical stocks and focus on defensives, which are least affected by changes in economic conditions.
DOLLAR BOUNCES
The strength in the dollar eroded investors's risk appetite
for commodities as copper prices
Analysts said the death of al Qaeda leader Osama bin Laden could reduce the threat against the United States in the long term, but the potential for retaliatory attacks in the short term would support oil prices.
The dollar index <.DXY>, which tracks the dollar against a basket of major currencies, was up 0.2 percent after hitting a three-year trough on Monday.
Sentiment for the dollar has been overwhelmingly bearish as near zero U.S. interest rates have made it the funding currency of choice in carry trades.
"In the near term, the dollar's fall could extend further still but levels are now becoming more stretched in terms of valuation and positioning. Momentum indicators are also showing the dollar is very oversold," said Lee Hardman, currency strategist at BTM-UFJ in London.
The Australian dollar
The euro
Credit Suisse said in a note that the common currency could appreciate another 5 to 10 percent before it became a problem for the euro zone economy. (Additional reporting by Chuck Mikolajczak in New York, Josie Cox in Frankfurt, Neal Armstrong in London and Francis Kan in Singapore)