NEW YORK (Reuters) – Stocks pulled back from five-month highs in early trading on Wednesday, with pressure on the euro testing the view that U.S. equities were decoupling from the single currency.

Energy shares led equities lower as U.S. crude futures posted their fourth decline in five days. The S&P energy sector index (.GSPE) fell 1.1 percent and an index of oil services companies (.OSX) dropped 1 percent.

The euro fell near 16-month lows against the U.S. dollar after Fitch warned of dire consequences for the currency if the European Central Bank does not take more action.

U.S. equities have been struggling to delink from the performance of the euro, a trend that became the norm in the last quarter of 2011 as traders fretted over possible sovereign defaults in the euro zone.

Steve Goldman principal at Goldman Management in Short Hills, New Jersey, said the market was still very aware of what is happening in European debt markets, ahead of Spanish and Italian bond auctions later this week.

"U.S. markets are tethered to that, even though we still want to move higher," he said. "Even U.S. banks are diverging from the European banking system."

But the link has been weakening. The 50-day correlation between the S&P 500 e-mini futures contract and the euro crossed the zero line this week after four months of being in positive territory, indicating they were no longer on the same path.

The Dow Jones industrial average (.DJI) was down 36.21 points, or 0.29 percent, at 12,426.26. The Standard & Poor's 500 Index (.SPX) dipped 3.39 points, or 0.26 percent, at 1,288.69. The Nasdaq Composite Index (.IXIC) was off 0.83 points, or 0.03 percent, at 2,701.67.

The U.S. Federal Reserve will release its Beige Book, a summary of anecdotal information on current economic conditions around the United States, at 2 p.m. EST. The report may offer more evidence the economy's health is slowly being restored.

Supervalu Inc (SVU.N) shares dropped 10.3 percent to $7.53 after quarterly sales at the third-largest U.S. supermarket chain missed estimates.

Clothing retailer Urban Outfitters Inc (URBN.O), grappling with piled-up inventory and declining margins, said its chief executive resigned unexpectedly, sending the company's shares tumbling 18.4 percent to $23.98.

The Dow and S&P 500 hit five-month highs on Tuesday.

(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)

NEW YORK (Reuters) – Stocks declined Wednesday as a fall in commodity prices sparked a selloff in the energy and materials sectors and as a falling euro and high Italian bond yields kept Europe's debt crisis in focus.

Eight of 10 S&P 500 sectors were down, with energy (.GSPE) leading the way. The S&P 500 (.SPX) fell below its 50-day moving average, which may be a portent of more losses.

Italy's borrowing costs rose to a record after an auction of five-year debt, while the euro fell to an 11-month low against the dollar.

U.S. stocks have been weighed down this week in part on fears that an agreement at last week's European Union summit did not go far enough to resolve the two-year-old debt crisis.

"The main issue right now is the complete, absolute failure of the European Union to come to any kind of solution. They're back to where they started from," said Jeffrey Sica, president and chief investment officer at SICA Wealth Management in Morristown, New Jersey.

"Borrowing costs are going to rise and that's going to continue to put pressure on us. The summits they've had have taken us nowhere, and soon we're going to pay the price."

The Dow Jones industrial average (.DJI) was down 102.70 points, or 0.86 percent, at 11,852.24. The Standard & Poor's 500 Index (.SPX) took off 10.52 points, or 0.86 percent, at 1,215.21. The Nasdaq Composite Index (.IXIC) slid 39.64 points, or 1.54 percent, at 2,539.63.

The S&P energy sector (.GSPE) fell 2.5 percent as U.S. crude oil prices slid 4.2 percent to hover near $96 a barrel.

Gold dropped to its lowest level since early October as the weak euro and a shortage of dollar funding near the year-end prompted investors to sell aggressively. Commodity-related shares were further pressured by a strengthening U.S. dollar.

Investors were also disappointed the U.S. Federal Reserve made no mention of possible new stimulus measures after its Tuesday meeting.

Though a majority of economists polled by Reuters expected no more Fed action to boost the economy in the short term, another survey showed most primary dealers saw the central bank enacting some type of stimulus.

First Solar Inc (FSLR.O) tumbled 20 percent to $34 after it cut its 2011 sales and profit forecast. The maker of solar power systems joins a list of companies, including Intel Corp (INTC.O) Dupont and Co (DD.N) and Texas Instruments Inc (TXN.N), that have cut their outlooks.

An index of home builder stocks (.DJUSHB) dropped 2.4 percent after the National Association of Realtors said data on sales of previously owned homes will be revised downward because of double counting.

(Reporting by Angela Moon; additional reporting by Ryan Vlastelica)