* World stocks slip after 10 sessions of gains
* Some markets nervous ahead of UK budget
* Euro is flat against dollar
By Jeremy Gaunt, European Investment Correspondent
LONDON, June 22 (Reuters) - World stocks fell for the first time in two weeks on Tuesday as investors took some profits on a cooler assessment of China's weekend decision to give its currency more flexibility.
A reading from Germany's Ifo institute pointing to a moderately improved business climate had little impact.
Financial markets, however, were also cautious ahead of Britain's budget later in the day, which is expected to contain massive spending cuts and tax rises to combat rising debt worries.
MSCI's all-country world index <.MIWD00000PUS> was down 0.4 percent, looking set for its first loss since June 7. In the period in between, the benchmark has gained more than 7 percent.
Investors have been tentatively embracing riskier assets over the past fortnight as their worst fears about a euro zone sovereign debt collapse have eased.
Stocks outside the United States got a particular boost on Monday following China's announcement it planned a more flexible currency regime.
This boosted hopes that a stronger yuan would lift purchasing power for imported goods and raw materials, giving the global economic recovery a much-needed shot in the arm.
Investors took a more considered view of the impact on Tuesday and grew sceptical about how much Beijing would actually allow the yuan to rise.
"People gave much more weight to the currency move than it deserved," said Koen De Leus, economist at KBC Securities.
The FTSEurofirst 300 <
> was down 0.3 percent after rallying for nine sessions in a row.Earlier, Japan's Nikkei <
> closed down 1.2 percent, a day after bouncing to a one-month high.
EURO DIPS
The euro also retreated from a one-month high against the dollar, tracking a pullback from riskier assets.
Upward momentum seen on Monday in the euro and other higher-risk currencies including the Australian dollar petered out as investors acknowledged Beijing's vow for a more flexible yuan policy would not lead to a sharp appreciation in the currency.
The euro <EUR=> traded at $1.2316, unchanged on the day after hitting the day's low of $1.2285 in earlier trade. The single currency pulled back from $1.2490 hit on Monday, its strongest since May 24.
Euro zone government bond yields were flat.
Britain's 10-year Gilt/Bund yield spread tightened as investors expected the budget to be austere and result in a downward revision in gilts issuance. (Additional reporting by Umesh Desai, Naomi Tajitsu, and Atul Prakash; editing by Stephen Nisbet)