The second-quarter earnings season was looming large for investors who are seeking a clearer picture of the economy's prospects, as a fading recovery, persistently high unemployment in the United States, Europe's debt troubles and commercial real estate losses have kept concerns of a double-dip recession alive.

Markets were also jittery about Europe's fiscal issues and the health of its financial sector ahead of the stress tests on the continent's banks - including many regional banks where markets suspect most of the sore spots lie - as it seeks to restore confidence in the sector.

China's release of data showing a drop in demand for copper for a third straight month drove down the price of copper more than 2 percent and weighed on the price of mining shares on both sides of the Atlantic. China is the world's top metals consumer, and the drop in demand cast a shadow on the demand outlook.

The euro fell against the dollar, pulling back from a two-month high, with investors betting recent gains were too far, too fast, while oil prices fell more than 1 percent as the dollar strengthened and ahead of corporate earnings results.

"Earnings season is a risk. The weaker euro will help internationally-exposed European companies, but not U.S. companies like Caterpillar," said Heino Ruland, strategist at Ruland Research in Frankfurt. "So we could see a divergence."

The Dow Jones Industrial Average edged up 4.31 points, or 0.04 percent, at 10,202.34. The Standard & Poor's 500 Index eased 0.99 points, or 0.09 percent, to 1,076.97. The Nasdaq Composite Index was off 0.97 points, or 0.04 percent, to 2,195.48.

The earnings season will kick off with Alcoa after the market close on Monday, and results from Intel, J.P. Morgan, Google, Bank of America, GE and Citi will follow later in the week.

Thomson Reuters data shows earnings of S&P 500 firms are expected to grow 27 percent in the second quarter from the previous three months, after expanding at a rate of 58.3 percent in the January-March period.

So far, with 26 of 500 firms already reported, 69 percent of earnings came in above expectations.

The S&P Materials index slid 1.1 percent after the Chinese on falling copper demand, sending Freeport McMoRan Copper & Gold Inc. down 4.3 percent to $63.12.

The MSCI world equity index eased 0.18 percent.

In Europe, the FTSEurofirst 300 index eked out a gain, rising 0.3 percent for a fifth straight day of gains. Shares of BP surged 9.4 percent to their highest close in a month, boosted by reports of asset disposals to help pay for the oil major's Gulf of Mexico spill and hopes for a new system to capture almost all the spewing oil.

The euro fell 0.52 percent to $1.2568, pulling away from last week's two-month high as concerns about the effectiveness of stress tests on European banks prompted investors to trim long positions in the single currency.

Oil prices retreated Monday. Benchmark crude lost $1.14 to settle at $74.95 a barrel on the New York Mercantile Exchange A stronger dollar hurt oil prices. Oil and other commodities are priced in dollars so a stronger dollar makes them more expensive for foreign buyers.

Oil prices rose sharply last week on investor optimism that the US economy, while likely to slow, won't slip into recession later this year.

In other Nymex trading, heating oil fell 3.44 cents to settle at $1.9913 a gallon, gasoline dropped 4.20 cents to settle at $2.0280 a gallon and natural gas gave up 1.4 cents to settle at $4.388 per 1,000 cubic feet.

In London, Brent crude fell $1.05 to settle at $74.37 a barrel on the ICE Futures exchange.