(Updates prices after U.S. stock market close)

* Wall Street dips after Japan's Nikkei, South Korea's KOSPI

tumble

* Chips drop globally even as TSMC earnings blow past

expectations

* Bond yields rise slightly with U.S. dollar

By Sinéad Carew and Marc Jones

NEW YORK/LONDON, July 16 (Reuters) - Equity indexes around

the world fell on Thursday as investors offloaded heavy-weight

chip stocks while the U.S. dollar and Treasury yields rose after

the latest economic releases and as the Middle East war

intensified.

Chip stocks fell from Asia to the U.S., as higher-than-expected

77% earnings growth from Taiwanese chip manufacturing giant TSMC

was not enough to impress investors who have heavily

leaned into technology stocks related to artificial

intelligence.

The U.S. second-quarter reporting season started off well,

with analyst expectations for quarterly earnings growth

increasing to 24.8% on Wednesday from 23.7% last week, according

to LSEG. But high expectations could result in short-term

weakness, said Tony Welch, chief investment officer at

SignatureFD.

"When you've a lot of optimism in the market you need

everything to go right. Any piece of negative news can throw the

market off," he said. "There's a lot of confidence built in

right now. It's not a bad thing in itself but it does create a

high hurdle for market prices to keep going higher."

On Wall Street, the Dow Jones Industrial

Average fell 105.67 points, or 0.2%, to 52,552.97, the

S&P 500 fell 38.63 points, or 0.5%, to 7,533.77 and the

Nasdaq Composite fell 387.28 points, or 1.5%, to

25,881.95.

MSCI's gauge of stocks across the globe

fell 6.49 points, or 0.6%, to 1,121.65. The pan-European STOXX

600 index closed up 0.16%.

South Korea's technology-heavy KOSPI index fell more

than 6%, while Japan's Nikkei closed nearly 3% lower.

The Philadelphia semiconductor index tumbled 4.3%, its

second straight daily loss.

"That tells you the AI trade isn't being priced on growth

anymore. It's being priced on perfection. Any earnings report

that's merely great, instead of flawless, gets sold," said Gene

Goldman, chief investment officer at Cetera in El Segundo,

California.

OIL EASES EVEN AS WAR ESCALATES

Iran and the United States exchanged fire on Thursday,

intensifying attacks that have persisted since the weekend,

largely unraveling the truce that paused fighting last month.

While the two countries wrestle for control of the Strait of

Hormuz, Iran signalled that it could prod Houthi allies in Yemen

to close the Bab al-Mandeb Strait at the mouth of the Red Sea,

another key oil route.

Still, oil futures edged lower, with U.S. crude settling

down 0.8%, or 65 cents, to $78.95 a barrel while Brent

settled at $84.23 per barrel, down 0.85%, or 72 cents.

U.S. retail sales increased 0.2% in June, in line with

expectations, as lower gasoline prices weighed on receipts at

service stations, though consumers continued to support

underlying spending. Weekly initial jobless claims dropped to a

seasonally adjusted 208,000, below economists' 217,000 estimate.

U.S. Treasury yields were modestly higher after those figures

did little to alter investors' expectations for the path of

interest rates from the Federal Reserve.

The yield on benchmark U.S. 10-year notes rose

1.44 basis points to 4.559%, from 4.545% late on Wednesday while

the 30-year bond yield rose 0.25 basis points to

5.0855%.

The 2-year note yield, which typically moves in

step with interest rate expectations for the Federal Reserve,

rose 2.55 basis points to 4.154%, from 4.128%.

The dollar edged higher against major peers, though was still

near a one-month low, reflecting expectations that the U.S.

economy will remain resilient and that the Fed will hold rates

steady this month.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

rose 0.3% to 100.74, while the euro fell 0.2% at $1.1441.

Against the Japanese yen, the dollar strengthened

0.1% to 162.37. Sterling weakened 0.5% to $1.3475,

slipping from the two-month high it reached on Wednesday.

In precious metals, gold fell to a two-week low after rising the

prior two sessions. Spot gold fell 2.1% to $3,976.24 an

ounce while spot silver fell 3.8% to $55.56 an ounce.