(Updates to afternoon US trading)

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Wall Street pulls itself out of the red, Europe closes

lower

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Trump says not likely to fire Powell

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US producer price data unexpectedly unchanged

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Oil prices pare losses, gold up but off session highs

By Sinéad Carew and Elizabeth Howcroft

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

advanced slightly on Wednesday while the dollar fell with U.S.

bond yields, as markets calmed after U.S. President Donald Trump

said he was "highly unlikely" to fire Federal Reserve Chair

Jerome Powell.

Markets had turned volatile in midday trading with stocks losing

ground, the dollar selling off sharply, and gold prices spiking

on fears Trump was seeking to remove the central bank chief. But

investors reversed course after Trump contradicted a Bloomberg

report that he was planning to oust Powell.

The president said he had spoken with some Republican

lawmakers about the idea and unleashed fresh criticism against

Powell while declining to completely reject the possibility of

switching out the Fed chair, whose term is up in May 2026.

Powell has faced frequent public criticism from Trump as the

central bank has kept interest rates steady while it monitors

the inflationary impact from tariffs. The president has railed

against Powell for not cutting rates sooner, prompting concern

about whether the Fed's independence could be eroded.

While the market would respond negatively to Powell's

ouster, Gene Goldman, chief investment officer at Cetera

Investment Management, noted it would take some time to remove

the policymaker, who has just one vote of 12 on monetary policy

changes. But he sees plenty more investor worries.

"The markets remain very jittery. We have high valuations, and

it's the beginning of earnings season with OK but not great bank

earnings," said Goldman. He also pointed to a bearish outlook

from Dutch company ASML as clients of the world's

biggest supplier of computer chip-making equipment await clarity

on U.S. tariffs before making big purchases.

"ASML's cautious outlook is not a great indicator for the

semiconductor industry. And inflation reports have not

equivocally given any suggestion that the Fed should cut rates

any time soon."

Earlier on Wednesday, data showed U.S. producer prices were

unexpectedly unchanged in June as an increase in the cost of

goods due to tariffs on imports was offset by weakness in

services. The unchanged reading in the producer price index for

final demand last month followed an upwardly revised 0.3% rise

in May. This was after Tuesday's U.S. consumer price data for

June pointed to higher costs for some goods.

"It's very early innings when determining whether or not and to

what extent tariffs are going to impact inflation," said Don

Calcagni, chief investment officer at Mercer Advisors.

While investors wait to see where the Trump administration

ultimately sets tariff levels, Calcagni noted that inflation

numbers are also being muddied by the depletion of goods in

stock at companies that had built up higher-than-usual

inventories in anticipation of the new import taxes.

On Wall Street, at 2:59 p.m. EDT (1859 GMT), the Dow Jones

Industrial Average rose 208.60 points, or 0.47%, to

44,231.77, the S&P 500 gained 19.53 points, or 0.31%, to

6,263.29 and the Nasdaq Composite rose 46.11 points, or

0.22%, to 20,723.91.

MSCI's gauge of stocks across the globe

climbed 1.37 points, or 0.15%, to 921.62.

Earlier, the pan-European STOXX 600 index had

closed down 0.57% with the chip sector dragging European

equities lower.

In currencies, the dollar index, which measures the

greenback against a basket of currencies including the yen and

the euro, pared an earlier drop and was last down 0.2% to 98.39.

The euro was up 0.24% at $1.1627 while against the

Japanese yen, the dollar weakened 0.62% to 147.93.

Sterling pared gains and was last up 0.2% at $1.3406.

Earlier data showed that Britain's annual rate of consumer price

inflation unexpectedly rose to its highest in over a year.

In Treasuries, the yield on benchmark U.S. 10-year notes

fell 3.6 basis points to 4.453%, from 4.489% late on

Tuesday, while the 30-year bond yield fell 0.4 basis

points to 5.0135%.

The 2-year note yield, which typically moves in

step with interest rate expectations for the Federal Reserve,

fell 7.4 basis points to 3.885%, from 3.959% late on Tuesday.

Oil prices edged lower on Wednesday as U.S. fuel inventory

builds and concerns about wider economic impact from U.S.

tariffs outweighed some signs of stronger Chinese crude

consumption.

U.S. crude settled down 0.21% at $66.38 a barrel

while Brent futures fell to $68.52 per barrel, down

0.28%.

Gold prices trimmed gains on Wednesday after Trump denied he

was planning to fire Powell.

Spot gold was up 0.85% at $3,350.49 an ounce after

earlier rising as much as 1.6%.