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European stocks tumbled to a 5-week low in morning trade, with construction and cement shares taking a beating after Irish building supplies major CRH CRH.I warned core earnings would fall 10 percent this year, signaling rising worries over the health of the U.S. economy.

Shares were also hammered in Tokyo, where the Nikkei average hit a 15-month closing low below 9,000 points, with hedge funds and foreigners seen selling amid mounting concern about the authorities inaction over the strong yen, which threatens a fragile economic recovery. .T

Oil futures dropped 1 percent to a 7-week low around $72 a barrel, as the U.S. driving season draws to a close with large stockpiles of gasoline remaining.

At least seven of the 17 top Federal Reserve officials at the U.S. central banks August meeting had reservations about the decision to buy more Treasuries, the Wall Street Journal reported on Monday.

Media stocks will be eyed after WPP WPP.L, the worlds largest ad firm by sales, lifted its outlook for the year after posting a 3.1 percent rise in key organic revenue for the first seven months on strong growth in the United States and traditional media, but the firm cautioned that comparatives would get tougher in the second half.

Nokia NOK1V.HE and chipmaker Intel INTC.O said on Tuesday their joint software venture, seen as crucial in helping Nokia improve its position at the top end of the handset market, had got off to a solid start.

Economic data expected for Tuesday includes existing home sales for July. Wall Street is expecting sales of 4.7 million, according to Thomson Reuters data. On the earnings front, companies expected to report earnings on Tuesday include Medtronic Inc MDT.N and Big Lots Inc BIG.N.

U.S. stocks slipped in one of the lightest volume sessions of the year on Monday, with tech shares weighing on the broad market as a possible bidding war over data storage company 3PAR PAR.N between Hewlett-Packard Co HPQ.N and Dell Inc DELL.O sent shares of HP down 2 percent.

The Dow Jones industrial average .DJI slipped 39.21 points, or 0.38 percent, to 10,174.41. The Standard & Poors 500 Index .SPX lost 4.33 points, or 0.40 percent, to 1,067.36. The Nasdaq Composite Index .IXIC fell 20.13 points, or 0.92 percent, to 2,159.63.

Reporting by Blaise Robinson; editing by Simon Jessop

The yen rose as stop-loss sales were triggered in the euro/yen pair at around the 107 yen level amid talk of macro hedge-fund selling in the euro against the dollar.

Falls in stock markets also helped buoy the yen broadly on the crosses while narrowing yield differentials between U.S. Treasuries and Japanese government bonds dragged the U.S. dollar down against the yen.

The market has been dipping its toe toward the 85 yen level, knowing full well that the options in front of the Japanese authorities are pretty limited, said Neil Mellor, currency strategist at Bank of New York Mellon.

Any intervention will have limited shelf life, so now the Bank of Japan has to formulate policies which can undermine the yens strength. This will not be easy and we could still be headed toward the 105 yen mark for euro/yen.

Japanese Finance Minister Yoshihiko Noda was scheduled to hold a news conference at 0800 GMT 4 a.m. EDT.

The euro fell to as low as 106.80 yen on trading platform EBS, its lowest since November 2001, having fallen past support at around 107.27 yen, the trough hit in June. The euro fell to a six-week low against the dollar of $1.2614 on EBS.

The greenback struck a 15-year low of 84.48 yen on EBS, down 0.6 percent. Helping the yens recent rise against the U.S. dollar was its strong correlation with spreads between two-year U.S. and Japanese government bond yields.

The low-yielding yen is a funding currency for carry trades and can rise in times of market stress or when equities slide.

JAPANESE AUTHORITIES

With the yen hitting a nine-year peak against the euro and a 15-year high against the dollar, traders were wary about the potential for measures by Japanese authorities to stem the yens rise.

Japanese Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa discussed the yen and agreed to work closely in a phone conversation held on Monday, but Kan did not ask the central bank to ease monetary policy further, and the two did not touch on currency intervention either.

That left the market disappointed after many expected bold moves from the Japanese authorities. Market players say the most likely response from Japanese authorities may be for the BOJ to increase the size or extend the duration of its three-month fixed rate fund supply operation.

But traders were skeptical that Japanese authorities would resort to yen-selling intervention unless the currencys rise picks up more speed.

Japanese policy makers will be desperate to prevent a break in dollar/yen down to 80 but that looks the trend, Chris Turner, head of fx strategy at ING said in a note.

Additional reporting by Masayuki Kitano in Tokyo; Editing by Nigel Stephenson