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US stocks down in afternoon trade

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MSCI all country stock index hits record high early

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Dollar index dips

(Updates to 3 p.m. ET)

By Caroline Valetkevitch

NEW YORK June 28 (Reuters) - Global stock indexes edged

lower on Friday, reversing early gains as investors absorbed

data that showed U.S. inflation was flat in May but in line with

expectations, while Treasury yields turned higher.

Uncertainty around the U.S. presidential election and the

imminent French legislative elections helped to offset the early

reaction in the bond market to the U.S. inflation data.

The Fed's preferred inflation measure, the personal

consumption expenditures (PCE) index, showed that annual growth

in prices was 2.6% in May, as economists had expected, down from

2.7% in April.

While the data fueled some investor optimism the Federal

Reserve could begin cutting interest rates in September, the

early rally in stocks faded.

The MSCI world stock index, S&P 500 and Nasdaq all hit

record highs in early trading before retreating.

"The Fed will see in this data what it wants to see and

that's going to keep everyone guessing as to when the next cut

will be," said Brian Jacobsen, chief economist at Annex Wealth

Management in Menomonee Falls, Wisconsin.

Investors were still digesting comments made during the U.S.

presidential debate late Thursday between Democratic President

Joe Biden and Republican rival Donald Trump ahead of the

November election. The debate left some of America's allies

bracing for a Trump return to office as president.

Trump Media & Technology Group ( DJT ) shares rose early but

were last down more than 11%.

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

last up 4.9 basis points at 4.337% versus 4.288% late on

Thursday.

The Dow Jones Industrial Average fell 122.54 points,

or 0.31%, to 39,041.52, the S&P 500 lost 8.53 points, or

0.15%, to 5,474.59 and the Nasdaq Composite lost 28.70

points, or 0.15%, to 17,831.74.

MSCI's gauge of stocks across the globe fell

0.49 points, or 0.06%, to 803.26. The STOXX 600 index

fell 0.23%.

The dollar index, which measures the greenback

against a basket of currencies, was down 0.07% at 105.82

following the PCE data.

Against the Japanese yen, the dollar was nearly

unchanged at 160.71.

The yen's slide to a 38-year low has fueled expectations of

intervention by the Japanese authorities to stem the currency's

weakness.

The euro was up 0.12% at $1.0714, with investors

awaiting France's elections.

Worries about the outcome of the two-stage French

parliamentary elections that start on Sunday pushed the risk

premium on French government bonds over German bonds to its

widest since the euro zone debt crisis in 2012.

U.S. West Texas Intermediate (WTI) crude futures fell

20 cents, or 0.24%, to settle at $81.54 a barrel.