*

Trump pushing for rate cuts by Fed, mulls choosing

successor to

Powell early

*

Stocks take breather after relief rally over Israel-Iran

ceasefire

*

Oil prices on track for second straight session of gains

(Updates prices throughout with mid-day trading, adds New York

dateline and fresh analyst comment)

By Marc Jones and Chibuike Oguh

NEW YORK/LONDON, June 26 (Reuters) - The dollar sank to

a more than three-year low even as global shares hit their third

record high in three days on Thursday and amid growing market

concerns about the Federal Reserve's independence.

The U.S. dollar index was down nearly 0.5% on the

session and more than 10% for the year. If it stays that way in

the next few days it will be its biggest fall in the first half

of a year since the start of the era of free-floating currencies

in the early 1970s.

Wall Street's main indexes were trading higher, with the

benchmark S&P 500 and Nasdaq nearing record highs. The Dow Jones

Industrial Average rose 0.74% to 43,302.85, the S&P 500

rose 0.66% to 6,132.52 and the Nasdaq Composite

rose 0.73% to 20,118.65.

European shares finished up 0.09%. MSCI's gauge of

stocks across the globe rose 75% to 908.96,

hitting a new record high for the third straight session.

A Wall Street Journal report said President Donald Trump - who

has been urging the Fed to cut rates faster - was toying with

the idea of selecting Chair Jerome Powell's replacement in the

next few months ahead of the end of his term next May.

Powell had just wrapped up two days of testimony to U.S.

Congress, where he said the central bank would be careful in

considering further rate cuts as it expects Trump's tariffs

would cause prices to rise this summer.

Such an appointment by Trump of a shadow Fed chair will

likely shake investor confidence in the central bank's

independence, which is helping to contribute to the dollar's

weakness, said Wasif Latif, chief investment officer at Sarmaya

Partners in New Jersey.

"The market recognizes that sooner rather than later, Powell

will walk off the stage and the next appointment will likely be

somebody that's a little bit softer or dovish or somewhat

politically driven," Latif said. "And the market is saying the

next chair will likely be more amenable to big cuts than Powell

has been and so I think that's part of what's feeding into the

dollar weakness and gold is also reflecting that."

Overnight in Asia, Tokyo's Nikkei jumped 1.65% to its

highest level since January, while MSCI's index of Asia-Pacific

shares outside Japan finished slightly higher

too.

The euro is now at its strongest level against the dollar

since 2021 and trade tariff talks are looming with

Washington next week, ahead of a Trump-imposed global deadline

of July 9.

The dollar weakened to a decade-low against the Swiss franc

at 0.79855. It was also down 0.73% to 144.195 against

the Japanese yen.

The dollar index, which measures the U.S. currency

against six peers, now sits at its lowest level since March 2022

following its slide this year.

"The striking thing on the dollar trend of the last six

weeks is that in almost any market regime the dollar is

struggling to appreciate," State Street's Michael Metcalfe said.

"It seems to be in something of structural decline," he

added, highlighting State Street data that investors were now

the most negative they have been on the dollar - or

"underweight" in banking speak - since the COVID pandemic.

Traders are now pricing in a nearly 25% chance of the Fed

cutting rates in its end-of-July meeting, compared with 12.5%

last week, the CME FedWatch tool showed.

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

fell 1.6 basis points to 4.277%.

The two-year U.S. Treasury yield, which

typically moves in step with interest rate expectations, was

down 2.9 basis points at 3.75%, its lowest level in seven weeks.

Germany's equivalent which is a benchmark for Europe,

0.4 basis points to 2.569%.

Oil prices were on track for their second straight day of gains

after their sharp slump following the Trump-brokered ceasefire

early this week between longtime Middle East foes Israel and

Iran. Trump had also announced plans to hold talks

with Iran next week to seek a commitment from Tehran on

curtailing its nuclear ambitions.

Brent crude futures rose 1.2% to $68.49 a barrel,

U.S. West Texas Intermediate crude (WTI) gained 1.43% to

$65.85. Gold dipped 0.2% to $3,325.54 an ounce..

(Editing by Alex Richardson and Toby Chopra)