Global markets: U.S. stocks fall on oil, earnings; dollar retreats

Reluctance to make big bets in advance of these policy-maker meetings lifted U.S. government yields to four-week peaks and German yields to their highest in five weeks.

"This is hardly a big sell-off but we are having trouble breaking through (to new highs on the Standard & Poor's 500 index) because of a lack of consistently good earnings and economic data," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

A surprise drop in new U.S. home sales in March supported a view of anemic U.S. economic growth, which may keep the U.S. central bank from raising interest rates.

The Fed is widely expected to leave rates unchanged on Wednesday, while the Bank of Japan will announce a policy update on Thursday with some analysts forecasting it may push key rates deeper into negative territory.

"Central banks are still the name of the game," said Jan von Gerich, chief strategist for developed markets at Nordea in Helsinki, Finland.

Additionally, there were signs that a three-month rally in equity and commodity markets is cooling.

The Dow Jones industrial average fell 26.51 points, or 0.15 percent, to 17,977.24, the S&P 500 declined 3.79 points, or 0.18 percent, to 2,087.8 and the Nasdaq Composite shed 10.44 points, or 0.21 percent, to 4,895.79.

The pan-European FTSEurofirst 300 .FTEU3 index, which hit a three-month peak last week, fell 0.6 percent to 1,364.13 points.

Tokyo's Nikkei ended 0.8 percent lower.

The MSCI world equity index, which tracks shares in 45 nations, fell 1.05 points or 0.26 percent, to 405.87.

Lower energy prices and disappointing results and guidance from Perrigo Co. and Xerox Corp knocked the major U.S. stock market indexes lower.

Brent oil futures settled down 63 cents or 1.4 percent at $44.48 a barrel, while U.S. oil futures finished $1.09 or 2.49 percent lower at 42.64 following a report that showed a spike in U.S. crude inventory.