World stocks edged lower on Tuesday after a buoyant session the day earlier and the dollar climbed off its lows against major currencies.

MSCI's all-country world stock index <.MIWD00000PUS> was down 0.2 percent, but only after Monday's gains that took it to new 2009 highs.

European shares were flat after opening lower. The FTSEurofirst 300 index of top European shares <.FTEU3> closed at its highest level in five months on Monday.

For this morning it is a realistic assumption that investors take some money off the table due to the massive increases yesterday, Roger Peeters, strategist at Close Brothers Seydler, wrote in a note.

Japan's Nikkei stock average <.N225> rose 0.3 percent, however, the second straight day it has closed at 8-month highs.

Investors have been lifted recently by signs that the global economy is on the mend. The latest came from Australia on Tuesday, which had better-than-expected net exports and rise in monthly new home approvals.

Economic indicators are now showing improvement from the worst period but until we see proof of a recovery in company results, it'll be difficult for the market to rise strongly and we're still a long way from the next earnings period, said Takashi Ushio, head of investment strategy at Marusan Securities.

DOLLAR EKES UP

The dollar steadied after hitting its lowest this year versus a basket of currencies on Monday. Commodity-linked currencies such as the Australian dollar, which hit an eight-month peak against the U.S. dollar, also eased.

The dollar is still on unstable ground, although we are seeing a degree of profit-taking today, said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.

Signs of improvement in the economy as well as improving financial conditions continue to weigh on the dollar.

The dollar index <.DXY> was up 0.2 percent at 79.351 after hitting its lowest since mid-December at 78.586 the previous day.

The euro was down 0.3 percent at $1.4121, having rallied to $1.4246 on trading platform EBS on Monday, its strongest since late December.

On euro zone bond markets, the 10-year Bund yielded 3.661 percent, down 1 basis point while the two-year Schatz yield was at 1.464 percent.

(Additional reporting by Tamawa Desai and Christoph Steitz)

Australia Japan Nikkei 225 European union