We keep buying july coffee on 134 , we sell june eurobund at 146.55 and remain long in apple ........

- U.S. and European stocks declined and the dollar fell against the euro and yen on Tuesday as an unexpected contraction in business activity in the U.S. Midwest added to worries about economic growth.

U.S. stocks were also dragged lower as investors took profits after the recent rally that pushed the S&P 500 to a record closing high on Monday. The Institute for Supply Management reported that business activity in the U.S. Midwest contracted in April to its lowest level since September 2009.

"People are worrying about the U.S. economy again," said Ronald Simpson, managing director of global currency analysis at Action Economics in Tampa, Florida.

Investors were also focusing on the Federal Reserve's two-day policy meeting, awaiting the release of the U.S. central bank's policy statement at the close of the meeting on Wednesday. Some believe the Fed's policy statement could sound relatively dovish in response to recent, weaker economic data.

On Wall Street on Tuesday, the Dow Jones industrial average finance/markets/index?symbol=us%21dji">.DJI was down 71.88 points, or 0.49 percent, at 14,746.87. The Standard & Poor's 500 Index .SPX was down 5.38 points, or 0.34 percent, at 1,588.23. The Nasdaq Composite Index .IXIC was down 3.06 points, or 0.09 percent, at 3,303.96.

MSCI's world equity index was up 0.2 percent, while the pan-European FTSEurofirst 300 index .FTEU3 was down 0.4 percent.

The S&P 500's record close on Monday was followed by a sharp 1.1 percent jump in MSCI's broadest index of Asia-Pacific shares outside Japan to a seven-month high.

In foreign exchange, the euro rose as high as $1.3168, according to Reuters data, and was last at $1.3166, up 0.5 percent on the day. The dollar fell 0.5 percent against the yen, to 97.30 yen, having fallen as low as 97.20 yen earlier.

Data out of Europe on Tuesday bolstered views the European Central Bank will cut interest rates when it meets on Thursday.

Even so, the dollar was being driven by views on the Fed as investors watch to see if the sluggish recovery and slowing inflation could not only end talk of tapering the Fed's bond-buying, but also push the Fed into buying more assets.

Weakness in the dollar "is mainly speculation on further Fed quantitative easing policy," said Ulrich Leuchtmann, head of FX research at Commerzbank. "The view that the Fed would scale down QE is coming more and more under question due to poor U.S. data."

Inflation in the euro zone hit a three-year low and unemployment rose to a record high, the EU statistics office reported. Adding to worries, German retail sales unexpectedly fell in March while Spain's economy shrank for the seventh straight quarter in the first three months of the year.

"It's looking more and more likely that the European Central Bank will indeed cut its main refinancing rate on Thursday while the Federal Reserve will stand pat on Wednesday," said Brian J. Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

Those expectations helped U.S. Treasury prices advance, with 10-year Treasuries up 7/32 in price to yield 1.64 percent, near their lowest levels since December.

A cut in the ECB benchmark rate by 25 basis points to a record low of 0.5 percent after its policy meeting on Thursday has been largely factored in by financial markets, though many analysts and dealers still harbor some doubts it will happen.

Only a narrow majority of 76 economists polled by Reuters last week forecast a 25 basis point cut in the main rate to 0.5 percent on Thursday. A separate survey of money market dealers showed they were evenly split on any move.

OIL DROPS

In the commodity markets the growth concerns, heightened by the recent run of weak economic data around the world, largely outweighed the hopes of further central bank support.

Brent crude dropped $1.17 to $102.64 a barrel. U.S. crude was 97 cents lower at $93.53 a barrel