LONDON (AFP) - European and Asian stock markets have pulled backed from multi-year peaks, despite a new overnight record high on Wall Street, as cautious investors locked in profits and eyed news from North Korea.

European equities had reaped bumper gains on Monday, with London's FTSE 100 index striking the highest close for more than five and a half years, and Frankfurt's DAX 30 index also enjoying the best finish since 2001.

Investor confidence across the globe is being bolstered by beneficial company news, positive economic data, and weak crude oil prices which bite less into corporate costs.

On Tuesday however, China and Japan joined the United States in warning North Korea against testing another atom bomb, amid reports of suspicious movement, and following last week's first announced nuclear test by the communist state.

In European trading, the FTSE 100 index of leading British shares eased 0.23 percent to 6,158.50 points in morning trade. London's FTSE 100 had on Monday closed at 6,172.40 points -- which was last seen in February 2001.

In Frankfurt on Tuesday, the DAX 30 index gave up 0.76 percent to 6,139.66 points and in Paris the CAC 40 index slid 0.74 percent to 5,322.23 points -- close to five-year peaks reached last week.

Earlier Tuesday, Japanese share prices lost ground for the first session in three, coming off five-months highs amid jitters about a stronger yen, upcoming earnings reports and concerns over North Korea, dealers said.

They added that profit-taking had set in, with investors seizing on news that Japan's government said Pyongyang may be getting ready for another nuclear test.

The Tokyo Stock Exchange's benchmark Nikkei-225 index dropped 0.49 percent to 16,611.59 points on Tuesday, one day after recording its best finish since May 11.

Hong Kong's key Hang Seng Index closed flat at 18,014.84 points as gains in blue chips China Mobile and HSBC and renewed interest in some Chinese financials helped the market recover from earlier losses, dealers said.

Australian share prices closed down 0.56 percent as investors took profits after solid gains over the past week while fresh interest rate concerns weighed on the banking sector, dealers said.

In Wall Street trading on Monday, US stocks had notched up modest gains as the Dow Jones index climbed to a new record high while flirting with the psychologically-important 12,000 level.

The benchmark index has broken a series of records in recent weeks as oil prices have slumped and confidence has mounted in the resilience of the US economy to weather a current downturn.

The Dow Jones Industrial Average of 30 blue chips advanced 0.17 percent to 11,980.60 points, a new closing record, after reaching an intraday all-time high of 11,997.25.

The tech-rich Nasdaq was up 0.28 percent at 2,363.84 points while the broader-market Standard and Poor's 500 index was 0.25 percent higher at 1,369.05 points.

The dollar, meanwhile, is edging back from its recent 10-month high against the yen, and three-month peak against the euro, as the foreign exchange market awaits fresh US data on Tuesday.

Dealers have in recent weeks scaled back hopes of a US interest rate cut early in 2007 -- which has boosted the US unit to multi-month peaks.

The euro, meanwhile, stood at 1.2532 dollars on Tuesday.

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