Global stocks slipped on Monday and investors briefly shunned the euro after Moody's cut the credit rating of Ireland, slightly unsettling markets already worried about a slowdown in the pace of U.S. economic recovery.

News the International Monetary Fund and the European Union suspended a review of Hungary's funding program, meaning it will not have access to remaining funds in its $25.1 billion loan package, further added to market concerns.

World stocks as measured by MSCI <.MIWD00000PUS> fell 0.2 percent, while its emerging market counterpart <.MSCIEF> lost 0.5 percent.

In Europe, the FTSEurofirst 300 index <.FTEU3> shed 0.2 percent. Austrian banks, given their exposure to Hungary, were among the biggest losers with Erste group bank down more than 2 percent.

Also under pressure, BP shares shed 3.5 percent on concerns over seepage detected near the company's damaged well in the Gulf of Mexico.

Investors are trying to assess the degree of slowdown in the recovery that we have seen over the last 12 months, said Keith Bowman, analyst at Hargreaves Lansdown.

The equity market has become extremely data-sensitive and every economic release will be looked at very closely. The market is likely to stay very volatile.

U.S. data last Friday showed consumer sentiment in the world's biggest economy dropped to a near one-year low in July and consumer prices fell for a third month in June, highlighting the sluggishness of the recovery.

EURO STEADIES

Sentiment for the euro was dented after Moody's cut the credit rating for Ireland by one notch to Aa2, although the fact that it changed the outlook to stable helped take the sting out of the downgrade.

Traders also said the Irish downgrade did not come as a surprise given Moody's had a negative outlook on Ireland but the timing did briefly unsettle markets.

The euro fell to a session low at around $1.2870 in the wake of Moody's move, but swiftly recovered to $1.2967, up 0.3 percent on the day. Against the yen, the single currency gained 0.6 percent to 112.64.

Near-term support for the euro is seen around the $1.2850 area, the 50 percent retracement of the euro's fall from a high near $1.3820 on March 17 to a four-year low of $1.1876 hit in early June.

The dollar <.DXY> slipped 0.1 percent against a basket of major currencies.

The impact of the Ireland downgrade was muted as Moody's kept a stable outlook, said Manuel Oliveri, currency strategist at UBS.

But we expect euro/dollar to remain capped and think the stress tests will provide the last chance to sell the euro again, he said, referring to the results of the European bank stress test on Friday.

Demand for safe-haven government bonds were underpinned by weakness in equity markets, helping keep yields near recent lows.

The 10-year German bond yield was little changed on the day at 2.605 percent, while the U.S. 10-year note yield was at 2.93 percent, having earlier touched a 1-1/2 week low of 2.916 percent.

U.S. crude slipped 12 cents to $75.89 a barrel, while copper climbed 0.6 percent to $6,535.00 a metric ton.

(Editing by Toby Chopra)

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