*

Wall Street, MSCI index fall

*

Fed Chair Powell gives no new direction on rate cuts

*

European defence stocks jump after Trump's comments on

Ukraine

*

US new home sales show upside surprise

*

Gold falls while oil and Treasury yields rise

(Updates to late US afternoon, adds oil settlement)

By Sinéad Carew and Amanda Cooper

NEW YORK/LONDON, Sept 24 (Reuters) - MSCI's global

equities gauge stayed close to flat on Wednesday while the

dollar rose and gold prices dipped, as investors digested

cautious comments from Federal Reserve Chair Jerome Powell about

when the central bank might next cut U.S. interest rates.

In his first remarks since the Fed meeting ended with a rate cut

last week, Powell on Tuesday underlined the need for

policymakers to balance the competing risks of high inflation

and a weaker jobs market in their next monetary policy

decisions.

However, traders were still pricing in a rate cut in October,

according to CME Group's FedWatch tool.

"Despite a fairly quiet day in terms of major directional market

drivers, equities have trended lower on anxiety over whether or

not the Fed cuts rates at each meeting for the balance of this

year," said Gene Goldman, chief investment officer at Cetera

Investment Management in El Segundo, California. He pointed to

Powell's comments along with economic data released on Wednesday

and anxiety ahead of an inflation reading due Friday.

Wednesday's data showed sales of new U.S. single-family homes

surged in August by 20.5% to a seasonally adjusted annualized

rate of 800,000 units. Economists polled by Reuters had forecast

a drop to 650,000 units. July sales were revised upward to

664,000 units from the 652,000 previously reported.

The stronger-than-expected housing market data could suggest an

economy where the Fed would not need to raise rates, Goldman

said.

Investors will have to wait until Friday for the Personal

Consumption Expenditures (PCE) August report, which includes the

Fed's preferred inflation measure.

Wall Street

was eyeing its second straight day of declines on Wednesday

after pushing to record highs on Monday.

At 2:54 p.m. (1854 GMT), the Dow Jones Industrial Average

had fallen 138.88 points, or 0.30%, to 46,154.31, the S&P 500

fell 20.14 points, or 0.30%, to 6,636.80 and the Nasdaq

Composite fell 76.44 points, or 0.35%, to 22,497.04.

MSCI's gauge of stocks across the globe fell

3.22 points, or 0.33%, to 978.94.

Earlier, the pan-European STOXX 600 index closed down

0.19%. In contrast, European defence stocks closed

1.5% higher after U.S. President Donald Trump said he believed

Ukraine could retake all its land occupied by Russia, marking a

sudden shift in rhetoric in Kyiv's favour.

Gold prices eased from the previous session's record highs

as the U.S. dollar firmed while investors hunkered down for the

upcoming economic data releases, seeking further cues on the

Fed's policy path.

Spot gold fell 0.99% to $3,726.49 an ounce. U.S. gold

futures fell 0.36% to $3,767.10 an ounce.

In currencies, the U.S. dollar gained against the yen, the Swiss

franc and the euro after Jerome Powell struck a cautious tone,

while the New Zealand dollar eased following the appointment of

a new central bank chief.

The dollar index, which measures the greenback against a

basket of currencies including the yen and the euro, rose 0.68%

to 97.89.

The euro was down 0.68% at $1.1735. The dollar

strengthened 0.83% against the Japanese yen to 148.84.

Against the Swiss franc, the dollar strengthened 0.57%

to 0.796. The kiwi weakened 0.8% versus the greenback to

$0.5809.

In government bond markets, U.S. Treasury yields inched higher,

driven by an increase in corporate and government bond supply,

while investors were still digesting Powell's comments.

The yield on benchmark U.S. 10-year notes rose 3

basis points to 4.149%, from 4.118% late on Tuesday, while the

30-year bond yield rose 2.8 basis points to 4.7655%.

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

with interest rate expectations for the Federal Reserve, rose

2.8 basis points to 3.598%.

Oil prices surged to a seven-week high and settled up more

than 2%, as a surprise drop in U.S. weekly crude inventories

added to a sense in the market of tightening supplies amid

export issues in Iraq, Venezuela and Russia.

U.S. crude settled up 2.49%, or $1.58, at $64.99 a barrel

and Brent settled at $69.31 per barrel, up 2.48%, or

$1.68, on the day.

In cryptocurrencies, bitcoin gained 1.48% to $113,691.14.