* Equities sink globally; on Wall St Nasdaq snaps weekly

winning streak

* Bond yields spike as inflation concerns return

* Oil prices settle higher with supply worries on

U.S.-Iran uncertainty

(Updates prices after U.S. market close)

By Sinéad Carew and Sophie Kiderlin

NEW YORK/LONDON, May 15 (Reuters) - Global equity

indexes fell on Friday while bond yields soared as investor

euphoria over technology stocks gave way to inflation fears and

traders raised bets that the Federal Reserve will hike interest

rates this year.

U.S. President Donald Trump left China on Friday with no

major breakthroughs on trade or tangible help from Beijing to

end the Iran war.

And uncertainty over a Middle East peace deal drove oil

prices higher, adding to concerns about inflationary pressures

after two batches of high inflation readings for April were

released earlier this week.

The S&P 500 and the Nasdaq sold off after climbing to

closing records on strength in artificial intelligence-related

technology stocks in the previous two sessions.

"There's a realization that the market had gotten way ahead

of itself. It wasn't paying enough attention to what the bond

market and economic data was telling it. It was caught up in

this momentum AI trade," said Kenny Polcari, chief market

strategist at Slatestone Wealth.

"The market is finally paying attention to what the bond

market and the economic data is telling it. Inflation remains

sticky and is potentially going to move higher in the months

ahead."

EQUITIES GO INTO REVERSE

On Wall Streetthe Dow Jones Industrial Average fell

537.29 points, or 1.07%, to 49,526.17, the S&P 500 fell

92.74 points, or 1.24%, to 7,408.50 and the Nasdaq Composite

fell 410.08 points, or 1.54%, to 26,225.15.

Still, the S&P 500 logged its seventh straight weekly gain,

its longest winning streak since late 2023. But the Nasdaq and

the Dow fell on the week, with the Nasdaq snapping a six-week

winning streak.

MSCI's gauge of stocks across the globe

fell 17.06 points, or 1.53%, to 1,099.00.

Earlier, the pan-European STOXX 600 index finished

down 1.48%. MSCI's broadest index of Asia-Pacific shares outside

Japan fell 2.5% and Japan's Nikkei slid

1.99% after data showed wholesale inflation accelerated to 4.9%

in April, the fastest pace in three years, keeping the Bank of

Japan on track to raise rates.

In South Korea the Kospi index fell more than 6% on

Friday after a steep run higher in recent months. It is still up

77.8% year to date.

GOVERNMENT BOND YIELDS SPIKE

In government bonds, U.S. Treasury yields climbed to their

highest levels in a year as elevated oil prices added to fears

that ongoing energy disruptions in the Middle East could add to

inflation.

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

13.8 basis points to 4.597%, from 4.459% late on Thursday while

the 30-year bond yield rose 10.9 basis points to

5.122%.

The 2-year note yield, which typically moves in

step with interest rate expectations for the Federal Reserve,

rose 8.7 basis points to 4.079%, from 3.992% late on Thursday.

In currencies, the dollar rose for its fifth consecutive

day, placing it on track for its biggest weekly gain in two

months, as the inflationary pressures drove bets for a Fed rate

hike this year.

Traders were last betting on a roughly 38.8% chance of a 25

basis point rate hike by year-end compared with a less than 14%

probability a week ago, according to CME Group's FedWatch tool,

which showed a 9.9% chance rates would be 50 basis points higher

by year end.

Friday is Jerome Powell's last day as Fed Chair before he is

replaced by Kevin Warsh. The incoming Chair was nominated by

Trump, who has pressured Powell to cut interest rates.

"The market is going to test Kevin Warsh. They're going to

press him to see what he really stands for," Polcari said.

The dollar index, which measures the greenback

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

rose 0.33% to 99.28, with the euro down 0.38% at $1.1624.

Against the Japanese yen, the dollar strengthened

0.25% to 158.74.

Sterling fell for the fifth straight day, and hit its

lowest in more than five weeks. It was last down 0.61% at

$1.3318 after sliding 0.9% on Thursday.

Britain's governing Labour Party said it agreed to let

Greater Manchester Mayor Andy Burnham seek a return to

parliament, a step toward a possible challenge to Prime Minister

Keir Starmer's leadership. Meanwhile British Housing Minister

Steve Reed urged Labour Party lawmakers to get behind Starmer,

saying nobody positioning to replace him had shown enough

support.

Oil prices rallied on supply worries after Foreign Minister

Abbas Araqchi said Iran has "no trust" in the U.S. and is

interested in negotiating only if Washington is serious. Trump

said he was running out of patience with Iran and that he and

Chinese leader Xi Jinping agreed that Iran cannot have a nuclear

weapon and must reopen the Strait of Hormuz.

U.S. crude settled up 4.2%, or $4.25, at $105.42 a

barrel while Brent rose to $109.26 per barrel, up 3.35%,

or $3.54, on the day.

Among precious metals, gold fell to a more than one-week low

under pressure from the rising dollar and Treasury yields as

well as the bets for higher interest rates.

Spot gold fell 2.35% to $4,540.11 an ounce. U.S. gold

futures fell 3.29% to $4,524.30 an ounce.