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Japan's yen strengthens to almost five-week high vs dollar

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US PCE data roughly in line with expectations

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Oil settle near flat with gasoline build, ceasefire in

focus

(Updated to afternoon trading)

By Sinéad Carew and Medha Singh

Nov 27 (Reuters) - MSCI's global equities index edged

lower and the dollar slipped with Treasury yields on Wednesday

as investors digested the latest economic data and the potential

impact of policies from the incoming U.S. administration,

including tariff threats.

Oil prices settled close to flat after a large, surprise

build in U.S. gasoline stockpiles and worries about the outlook

for U.S. interest rates in 2025 countered easing supply concerns

from a ceasefire deal between Israel and Hezbollah.

Equities lost some ground after data showed U.S.

consumer spending increased solidly in October, suggesting the

economy kept a strong growth pace but that progress dampening

inflation has stalled recently. In the 12 months through October

core inflation, which the Federal Reserve tracks monetary

policy, increased 2.8% after climbing 2.7% in September.

"This was no earth-shattering news for the markets. We

all expected that inflation would pop up a little bit, but

inflation is not getting out of hand. And that's the key," said

Peter Cardillo, chief market economist at Spartan Capital

Securities. "This paves the way for a 25 basis point cut in

December and then probably a pause."

After the data, traders were betting on a 70% probability

for a Fed rate cut in December compared with a roughly 59%

probability on Tuesday, according to CME Group's FedWatch tool.

On Wall Street, at 02:50 p.m. the Dow Jones Industrial

Average fell 112.78 points, or 0.25%, to 44,747.53, the

S&P 500 fell 20.60 points, or 0.34%, to 6,001.10 and the

Nasdaq Composite fell 108.10 points, or 0.56%, to

19,068.01.

MSCI's gauge of stocks across the globe fell

0.56 points, or 0.07%, to 858.52, while Europe's STOXX 600

index closed down 0.19% earlier in the day.

Investor reactions to the data took into account

President-elect Donald Trump's late Monday threat to immediately

put a 25% tariff on all products from Mexico and Canada when he

takes office in January, and impose an additional 10% tariff on

goods from China. The threat already drew warnings of

retaliation.

"Today's data shouldn't change views of the likely path for

disinflation, however bumpy. But a lot of observers, probably

including some at the Fed, are looking for reasons to get more

hawkish on the outlook given the potential for inflationary

policy change like new tariffs," said David Alcaly, lead

macroeconomic strategist at Lazard Asset Management in an email.

Wednesday's market moves were likely magnified by lower

liquidity as investors turned their focus to Thursday's U.S.

Thanksgiving holiday, according to Alex Atanasiu, portfolio

manager at Glenmede Investment Management. Thursday's market

close will be followed by a shorter trading day on Friday.

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

fell 5.8 basis points to 4.244%, from 4.302% late on

Tuesday while 30-year bond yield fell 5.3 basis

points to 4.427%.

The 2-year note yield, which typically moves

in step with interest rate expectations, fell 3.9 basis points

to 4.215%, from 4.254% late on Tuesday.

In currencies, the dollar index, which measures the

greenback against a basket of currencies including the yen and

the euro, fell 0.75% to 106.04.

Against the Japanese yen, the dollar weakened 1.38%

to 150.98 with the yen touching its strongest level versus the

greenback in almost five weeks.

The euro was up 0.75% at $1.0565 while sterling

strengthened 0.85% to $1.2675.

After falling on Tuesday, the Mexican peso

strengthened 0.23% versus the dollar at 20.628 while the

Canadian dollar strengthened 0.2% versus the greenback.

The largest cryptocurrency, bitcoin, attempted to

find its feet after a four-day retreat from a record high of

$99,830. It was last up 5.36% to $96,567.00.

Oil prices had flitted between red and green having fallen

on Tuesday following confirmation of the Israel-Hezbollah

ceasefire after selling off more sharply on Monday in

anticipation of such an agreement.

U.S. crude settled down 0.07% at $68.72 a barrel,

while Brent ended at $72.83 per barrel, up 0.03% on the

day.

In precious metals, spot gold rose 0.1% to $2,634.62

an ounce. U.S. gold futures rose 0.56% to $2,635.90 an

ounce.