Global stocks and commodity prices pulled back on Tuesday as investors paused to assess the state of the economy after pushing them higher in the past two weeks, while the U.S. dollar was broadly flat.

BNP Paribas , France's biggest bank by market value, posted higher second-quarter profit, and expressed some optimism over prospects for financial markets, while there were signs of improvement in Swiss bank UBS's underlying performance.

Better-than-expected second-quarter corporate earnings and improving economic data in major economies have helped push global equities, measured by MSCI, up in 13 out of the past 16 sessions.

The index hit its highest level in nearly 10 months on Monday.

If you run up so fast and so far, it's quite natural that you have some profit taking, Luc Van Hecka, chief economist at KBC Securities, said.

But the overall trend is certainly positive and the market is of the opinion that the worst is over. It is responding quite logically to the fact that earnings have generally been better than expected.

The MSCI world equity index was down nearly 0.2 percent. Shares in BNP Paribas advanced 1.2 percent, and those for UBS eased 0.3 percent.

Weaker commodity prices weighed on the pan-European FTSEurofirst 300 <.FTEU3> index, which was down 0.4 percent.

The European benchmark, which has rallied 45 percent since its March floor, traded at 12.5 times expected earnings, the index's highest price-to-earnings ratio since August 2007, according to Thomson Reuters data.

OIL DROPS

Oil fell below $71 a barrel, paring some of the previous day's 3 percent gain, as worries about a rise in U.S. crude inventories offset optimism from Monday's positive U.S. and Chinese manufacturing data.

The strong rally in oil prices over the past few days gave investors an opportunity to take some profits. There are also signs of increasing supplies, said Victor Shum, Singapore-based analyst at Purvin and Gertz.

And we should remember that we are going to enter a period of slow autumn demand. With supplies rising, it will not be surprising for oil to pull back below $70.

Metal prices also eased, with copper down from a fresh 10-month high.

The U.S. dollar <.DXY> was flat on a trade-weighted basis against a basket of major currencies but it slipped 0.3 percent to 94.93 yen.

The Australian dollar, meanwhile, pared gains from a near 10-month high against the dollar after the Reserve Bank of Australia kept interest rates unchanged and abandoned its easing bias, supporting expectations of a rate hike by year-end.

Yields on the benchmark 10-year U.S. Treasuries were flat at 3.628 percent, while the 10-year euro zone benchmark bund yield was down 1 basis points at 3.335 percent.

(Additional reporting by Atul Prakash in London and Sambit Mohanty in Singapore, editing by Mike Peacock)

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