LONDON (Dow Jones)--European stocks pushed lower Tuesday as investors consolidated gains following a very strong session on Monday, which saw the Stoxx Europe 600 register its strongest percentage gain since May 27. At the same time, the dollar weakened across the board as safe-haven bids continued to unwind and market participants speculated that the U.S. Federal Reserve, faced with a stalling economy, could resume bond buying and quantitative easing strategies. Commenting on this, Ian Harwood, chief economist at Evolution Securities said, "I don't doubt that the Fed would act in this way should the situation be sufficiently dire. "I am, however, sceptical that the U.S. economic situation will get sufficiently worrying. In fact, I think there's still good reason to be relatively upbeat about the US economy - profits are still on an upward track, as is capex and hiring." By 0800 GMT, Stoxx Europe 600 index was down 0.3% at 261.35. London's FTSE 100 index was down 0.6% at 5367.69, Frankfurt's DAX index declined 0.2% to 6277.93, and Paris's CAC-40 index fell 0.5% to 3734.97. Banks and miners, both the highest gaining sectors in the previous session, were recording the biggest declines as market participants decided to take some money off the table. Even strong results from miner Xstrata could not help muster a positive performance. Xstrata was last seen 1.2% lower at 1060.50 pence, despite reporting a more than threefold rise in first-half net profit. Also, shares in Fresnillo fell 0.5% to 1053.00 pence, after the company reported an 82% rise in first-half net profit, supported by stronger metal prices. On the upside, BMW gained 4.1% to EUR43.57, following a leap in second-quarter profit. The company has seen booming demand for luxury cars in China, along with a recovery in the U.S. Elsewhere, Sanofi-Aventis declined 0.1% to EUR45.38 as it enters friendly takeover talks with U.S. biotech firm Genzyme Corp., according to people familiar with the matter. Earlier, Asian stock markets were mostly higher Tuesday with financials and commodity plays rising, but China's market took a breather after its recent run-up. Japan's Nikkei Stock Average gained 1.3%, Australia's S&P/ASX 200 added 0.7%, and South Korea's Kospi Composite rose 0.5%. Hong Kong's Hang Seng Index rose 0.1%, Taiwan's main index was 0.6% higher, while the Shanghai Composite index finished 1.7% lower. Banks across the region were up strongly, tracking their U.S. and European counterparts. Indeed, U.S. stocks climbed Monday, helped by renewed faith in the key banking sector as well as encouraging data on industrial activity in the U.S. and Europe. The Dow Jones Industrial Average surged 2.0% to 10674.38 to mark its biggest one-day point gain since July 7, and closed at its highest level since May 13. The Nasdaq Composite rose 1.8% to 2295.36, while the Standard & Poor's 500 index added 2.2% to 1125.86. The gains came after some blockbuster results from HSBC and BNP Paribas spurred confidence over the health of the financial sector. Data also showed U.S. manufacturing sector growth slowed less than expected in July, while euro-zone manufacturing accelerated in the month. Meanwhile, markets were digesting comments made by Federal Reserve Chairman Ben Bernanke that the U.S. economy is still far from a full recovery. Speaking at the 64th annual meeting of the Southern Legislative Conference, Bernanke said the U.S. had a "considerable way to go to achieve a full recovery in our economy, and many Americans are still grappling with unemployment, foreclosure and lost savings." At the same time, a report by the Wall St Journal suggested that the Federal Reserve may consider increasing its bond purchases and introducing further monetary easing. This was contributing to the fall in the dollar, Tuesday. At 0810 GMT, the dollar was at Y86.04 from Y86.51 late Monday, having fallen to a new 2010 low of Y85.84. At the same time, the euro was up against the dollar, having shot to a three-month high against the greenback on Monday. The common currency rose through the $1.32 level, climbing to a high of $1.3237, and was last seen at $1.3232. Elsewhere, spot gold was trading at $1181.25 per troy ounce, down around $1 from the New York close, while the front month Nymex September crude futures contract settled above $80 per barrel for the first time since May after the wave of strong manufacturing-sector data renewed investors' faith in the global economic recovery. The contract was recently trading down 10 cents at $81.24 per barrel on Globex. The weaker tone to the equity markets has helped the core sovereign debt market higher, while the Wall Street Journal report that the Fed may consider more policy easing as concerns grow over the economic recovery in the U.S. is also helping. At 0819 GMT the September bund contract was up 0.14 at 128.48. With regards to the economic calendar, euro-zone PPI is at 0900 GMT, while U.S. personal income and spending follows at 1230 GMT, and pending home sales are at 1400 GMT. -By Andrea Tryphonides, Dow Jones Newswires; +44-20-7842-9281; andrea.tryphonides@dowjones.com

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