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Global stock index sticks close to Thursday's record

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Consumer sentiment dips to lowest since May

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Dollar rises with Treasury yields

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Gold trading near record highs

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

By Sinéad Carew and Iain Withers

NEW YORK/LONDON, Sept 12 (Reuters) - MSCI's global

equities index edged higher on Friday, after registering a

record close in the prior session, while U.S. Treasury yields

rebounded after sliding the day before when expectations climbed

for U.S. rate cuts.

The University of Michigan's Surveys of Consumers showed that

U.S. consumer sentiment fell for a second straight month in

September to its lowest point since May, as consumers saw rising

risks to business conditions, the labor market and inflation.

Consumer inflation expectations for the next year stayed at

4.8% but inflation expectations for the next five years rose to

3.9% from last month's 3.5%.

"The University of Michigan sentiment study came in worse

than expected and more importantly inflation expectations

remained pretty high. That's sending yields a little higher,"

said Jack Ablin, founding partner and chief investment

strategist at Cresset Capital.

"Investors worry that expectations dictate reality and

perhaps consumers will act accordingly if they expect inflation

to be higher than usual ... and just perpetuate the inflation

hamster wheel."

Wall Street was a mixed bag after all three of its main indexes

registered record closing highs on Thursday, when investors

reacted bullishly to weaker-than-expected jobs data by ramping

up bets that the Federal Reserve would make three rate cuts in a

row, including a cut on September 17 after its next meeting.

"The market feels a little stretched and toppy. And now

investors in the market are going to focus on next Wednesday and

exactly what Jay Powell says, how he says it. Does he sound more

dovish? What lines did he delete? What lines did he add?," said

Kenny Polcari, partner and chief market strategist at SlateStone

Wealth in Jupiter, Florida, referring to Fed Chair Jerome

Powell's press conference and the Fed's written statement.

"Rates are going lower for sure but I do think the market

has gotten ahead of itself in terms of valuation."

Thursday's U.S. consumer price report had been seen as the last

major hurdle before the Fed meeting. But while prices showed a

bigger-than-expected increase, market participants kept their

focus on a separate report that showed a sharp rise in

unemployment claims.

On Wall Street the Dow Jones Industrial Average fell

273.78 points, or 0.59%, to 45,834.22 and the S&P 500

fell 3.18 points, or 0.05%, to 6,584.29. The Nasdaq Composite

rose 98.03 points, or 0.45%, to 22,141.10 for another

record closing high.

For the week, the S&P 500 gained 1.59% while the Nasdaq rose

2.03% and the Dow climbed 0.95%.

MSCI's gauge of stocks across the globe rose

0.70 points, or 0.07%, to 972.15 and the pan-European STOXX 600

index closed down 0.09%, after giving up earlier

gains.

In currencies, the U.S. dollar rose on Friday, a day after

falling on a surge in U.S. jobless claims and modest inflation,

as investors prepared for interest rate cuts after a roughly

nine-month hiatus.

The dollar index, which measures the greenback against a

basket of currencies including the yen and the euro, rose 0.05%

to 97.60.

Against the Japanese yen, the dollar strengthened 0.26%

to 147.58.

U.S. and Japanese finance ministers on Friday released a

statement reaffirming that neither country would target currency

levels in their policies.

The euro was up 0.02% at $1.1735. On Thursday the

European Central Bank kept rates unchanged and signalled that it

was in a "good place" on policy. After the meeting, ECB sources

told Reuters the December meeting would be the most realistic

time frame to debate whether another cut was needed to buffer

the economy.

Britain's economy recorded zero monthly growth in July, in line

with forecasts but showing a sharp drop in factory output,

weighing on sterling, which weakened 0.09% to $1.356.

In U.S. Treasuries, yields rose as investors looked ahead to the

Fed's policy meeting.

The yield on benchmark U.S. 10-year notes rose 5.1

basis points to 4.062%, from 4.011% late on Thursday, while the

30-year bond yield rose 2.7 basis points to 4.6776%.

The 2-year note yield, which typically moves in step

with interest rate expectations for the Federal Reserve, rose

2.9 basis points to 3.558%.

In energy markets, oil prices settled higher after a Ukrainian

drone attack suspended loadings from the largest port in western

Russia, but gains were capped by concerns about U.S. demand.

U.S. crude settled up 0.51% or 32 cents at $62.69 a

barrel and Brent ended at $66.99 per barrel, up 0.93%,

or 62 cents, on the day.

In precious metals, gold was showing its fourth weekly gain in a

row and trading near its Tuesday record high, as investors

looked ahead to U.S. rate cuts.

Spot gold rose 0.3% to $3,644.67 an ounce. It hit a

record high of $3,673.95 on Tuesday.