*

Trump mulls choosing successor to Powell early

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S&P and Nasdaq finish near record highs

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Oil prices notch second straight session of gains

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Gold prices settle higher as U.S. dollar falls

(Updates prices throughout with U.S. market close, oil and gold

settlement)

By Chibuike Oguh and Marc Jones

NEW YORK/LONDON, June 26 (Reuters) -

Global shares hit their third record high in three days on

Thursday while the U.S. dollar sank to its lowest level in more

than three years amid growing market concerns about the Federal

Reserve's independence.

The U.S. dollar index was down nearly 0.43% on the

session and more than 10% for the year. If the greenback's

losses hold until the month ends, it will be the biggest fall in

the first half of a year since the start of the era of

free-floating currencies in the early 1970s.

Wall Street's main indexes finished higher, with the

benchmark S&P 500 and Nasdaq nearing record highs. The Dow Jones

Industrial Average rose 0.94% to 43,386.84, the S&P 500

rose 0.80% to 6,141.02 and the Nasdaq Composite

rose 0.97% to 20,167.91.

European shares finished up 0.09%. MSCI's gauge

of stocks across the globe rose 0.81% to 909.47,

hitting a new record high for the third straight session.

A Wall Street Journal

report

said President Donald Trump - who

has been urging

the Fed to cut rates faster - was

toying with the idea

of selecting Chair Jerome Powell's replacement in the next

few months ahead of the end of his term next May.

Powell had just wrapped up two days of testimony to U.S.

Congress, where he said the central bank would be careful in

considering further rate cuts as it expects Trump's tariffs

would cause prices to rise this summer.

Such an appointment by Trump of a shadow Fed chair will

likely shake investor confidence in the central bank's

independence, which is helping to contribute to the dollar's

weakness, said Wasif Latif, chief investment officer at Sarmaya

Partners in New Jersey.

"The market recognizes that sooner rather than later,

Powell will walk off the stage and the next appointment will

likely be somebody that's a little bit softer or dovish or

somewhat politically driven," Latif said. "And the market is

saying the next chair will likely be more amenable to big cuts

than Powell has been and so I think that's part of what's

feeding into the dollar weakness and gold is also reflecting

that."

The euro is now at its strongest level against the

dollar since September 2021 and trade tariff talks are

looming with Washington next week, ahead of a Trump-imposed

global deadline of July 9. The single currency was up 0.33% at

$1.1697.

The dollar weakened to a decade and half-year low against

the Swiss franc at 0.80030. It was also down 0.57% to

144.415 against the Japanese yen.

The dollar index, which measures the U.S.

currency against six peers, now sits at its lowest level since

March 2022 following its slide this year.

"The striking thing on the dollar trend of the last six

weeks is that in almost any market regime the dollar is

struggling to appreciate," State Street's Michael Metcalfe said.

"It seems to be in something of structural decline," he

added, highlighting State Street data that investors were now

the most negative they have been on the dollar - or

"underweight" in banking speak - since the COVID pandemic.

Traders are now pricing in a nearly 25% chance of the

Fed cutting rates in its end-of-July meeting, compared with

12.5% last week, the CME FedWatch tool showed.

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

4.5 basis points to 4.248%, dropping to its lowest level in

seven weeks.

The two-year U.S. Treasury yield, which

typically moves in step with interest rate expectations, was

down 5.8 basis points to 3.721%, its lowest level since May 2.

Germany's equivalent, which is a benchmark for

Europe, fell 0.7 basis points to 2.558%.

Oil prices were on track for their second straight day of

gains after their sharp slump following the Trump-brokered

ceasefire early this week between longtime Middle East foes

Israel and Iran. Trump had also announced plans to hold talks

with

Iran

next week to seek a commitment from Tehran on curtailing

its nuclear ambitions.

Brent crude futures settled up 0.07% to $67.73 a

barrel. U.S. West Texas Intermediate crude gained 0.49%

to $65.24 a barrel.

Gold prices gained as the U.S. dollar fell. U.S. gold

futures settled 0.2% higher at $3,348. Spot gold

was little changed at $3,330.20 an ounce.