* Fed, BOJ meetings this week see caution set in
* Wall Street follows Europe, Asia stocks down
* Dollar falls vs euro, yen
* Crude oil drops after report of inventory glut
* Pound touches one-month high following Obama U.K. visit (New throughout, changes byline, dateline, previous LONDON)
By Dion Rabouin
NEW YORK, April 25 (Reuters) - Global stocks fell along with the dollar and oil prices on Monday as an unexpected drop in U.S. new home sales added to investor uncertainty over the economy's outlook ahead of central bank policy meetings in the United States and Japan this week.
Wall Street moved lower, following stock markets in Asia and Europe which sank in early trading.
"People are taking some profits and stocks are looking a little bit expensive at the moment, especially since there is no earnings growth," said Randy Frederick, managing director of trading and derivatives for Charles Schwab (NYSE:SCHW) in Austin, Texas.
New U.S. single-family home sales unexpectedly fell in March, supporting a view of weak economic growth in the first quarter. there were signs that a three-month rally in equity and commodity markets was cooling ahead of the central bank meetings.
The U.S. Federal Reserve will announce a rate decision on Wednesday and the Bank of Japan will announce a policy update on Thursday, providing little incentive for traders to be bold.
Japan could push deeper into negative interest rate territory, analysts said, while there is intense speculation over where the Fed stands on further rate hikes this year.
"Central banks are still the name of the game," said Jan von Gerich, chief strategist for developed markets at Nordea.
"There is a chance that the Fed could surprise with a bit of hawkishness on Wednesday. The dollar hasn't really strengthened and the S&P 500 is back near its all-time high, so they could certainly test the market."
The Dow Jones industrial average .DJI fell 104.2 points, or 0.58 percent, to 17,899.55, the S&P 500 .SPX lost 10.28 points, or 0.49 percent, to 2,081.3 and the Nasdaq Composite .IXIC dropped 19.67 points, or 0.4 percent, to 4,886.56.
Oil prices LCOc1 CLc1 fell about 1 percent after an inventory spike at a key storage base for U.S. crude, although a weaker dollar limited the market's downside, keeping it not far from five-month highs.
U.S. Treasury yields rose to four-week highs on Monday in advance of a $26 billion auction of two-year notes and as investors awaited clues on future interest rate increases from the Fed.
Benchmark 10-year U.S. Treasuries fell 3/32 in price with the yield at 1.885 percent. Earlier Monday, the 10-year yield reached 1.904 percent, its highest since March 28.
The dollar index .DXY was trading 0.4 percent lower on the day at 94.767. Against the euro EUR= , it dipped 0.3 percent to $1.1267 and fell 0.6 percent against the yen JPY= to 111.10 yen.
Sterling, meanwhile, hit its highest in more than two months after a British media blitz by U.S. President Barack Obama over the weekend. Obama urged Britain to stay in the European Union, and bookmakers moved odds sharply in favor of Britain staying in the 28-member bloc.
The implied probability of a vote to remain in the EU in a June 23 referendum rose several percentage points to about 75 percent, according to live odds from bookmaker Betfair. British pound rose to $1.4519 GBP= in early trading, its highest since Feb. 15.
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http://reut.rs/1WAiOSC Currencies in 2016
http://link.reuters.com/tak27s
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