By Riva Gold 

Stocks slipped, the dollar dropped, and bonds strengthened to start the week as investors sought clarity on President Donald Trump's fiscal and trade policies.

The Stoxx Europe 600 was down as much as 0.7% midmorning, trading in negative territory for the year as losses in bank shares offset gains in the basic resources sector. Japanese stocks shed 1.3%, while futures pointed to a small opening decline for the S&P 500.

The WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, shed 0.4%, deepening Friday's losses.

Analysts pointed to a lack of policy detail in President Trump's inauguration speech and worries about his trade policies as catalysts for the latest leg lower in stocks and the U.S. currency.

On Friday, Mr. Trump said his administration would follow "two simple rules: Buy American and hire American."

"Our take on Mr. Donald Trump's inauguration address on Friday is that it appeared combative, protectionist and divisive in many respects," said Vasileios Gkionakis, currency strategist at UniCredit Research.

Mr. Trump is planning executive actions early in the week on immigration and trade, two White House officials said, and setting up meetings with leaders from Mexico and Canada and hosting U.K. Prime Minister Theresa May this Friday.

Investors had earlier bought the dollar and U.S. stocks and sold long-dated government bonds after the election on expectations of tax cuts, spending increases and rolled-back regulation under the new administration. That rally has stalled, however, amid uncertainty over the timing and scale of these policies and worry that a more protectionist stance on trade could hamper growth and hurt corporate profits.

"While the potential tax changes and regulatory changes have had a net positive impact on equity markets since the election, trade policy is a big unknown," said Bill Merz, investment strategist at U.S. Bank Wealth Management.

"Investors have a general idea of the direction that the Trump administration wants to go in terms of taxes, in terms of regulation and in fiscal policy as well. With trade policy, we don't have many details on what the landscape might look like," Mr. Merz said.

The dollar was off 0.8% against the yen at Yen113.6490, with the British pound up 0.6% against the dollar at $1.2443 and the euro up 0.2% against the dollar at $1.0727.

Earlier, the stronger yen weighed on stocks in Japan, while shares in Australia fell 0.8% amid weakness in the health care and industrials sectors. Markets in Hong Kong and Shanghai nudged higher.

In government bonds, the yield on the 10-year U.S. Treasury note fell to 2.455% from 2.466% Friday, recovering from steeper earlier losses. Yields on 10-year German bunds fell to 0.334% from 0.358%, while French government bonds yielded 0.903% from 0.915%. Yields move inversely to prices.

Candidates from opposing wings of France's Socialist Party emerged as the top two vote-getters in the first round of the country's leftist primary over the weekend. Benoît Hamon took the largest share of Sunday's vote, according to a partial count, while former Prime Minister Manuel Valls came in second.

In commodities, gold rose 0.5% to $1,210 an ounce while copper jumped 1% to $5,817 a ton as the dollar weakened, helping lift shares of miners in Europe.

Brent crude oil was little changed at $55.34 a barrel after Saudi Arabia voiced confidence that major producers were showing "very good compliance" to an agreement to curb output.

--William Mauldin, William Horobin and Jenny Hsu contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

January 23, 2017 05:19 ET (10:19 GMT)