(Updated at 1:38 p.m. ET/1738 GMT)

By Chuck Mikolajczak

NEW YORK, March 15 (Reuters) - A gauge of global stocks

was set to snap a seven-week streak of gains on Friday, while

the dollar was on track for its strongest week since

mid-January, as recent U.S. inflation data has fueled a

reassessment for the path of interest rates.

Equities have struggled for upward momentum this week, after

readings on U.S. consumer prices and producer prices indicated

inflation remains sticky, dampening expectations the U.S.

Federal Reserve will cut rates by its June meeting.

Markets are pricing in a 59.2% chance for a rate cut of at

least 25 basis points (bps) by the Fed in June, down from 59.5%

in the prior session and 73.3% a week ago, according to CME's

FedWatch Tool.

The central bank is widely expected to hold rates steady at

its policy meeting next week but investors will be closely

monitoring the central bank's economic projections.

Data on Friday showed U.S. import prices increased

marginally in February as a surge in the cost of petroleum

products was partially offset by modest gains elsewhere,

suggesting an improving inflation picture.

"If the macro data continues to be strong and inflation

stays this high, why in the world would the Fed cut?" said Liz

Young, head of investment strategy at SoFi in New York.

"Or if the Fed did cut in the face of that, then we run the

risk of overheating and seeing a re-acceleration in inflation,

and then it's like at the end of the story, nobody wins."

On Wall Street, the Dow Jones Industrial Average fell

230.82 points, or 0.59%, to 38,674.84, the S&P 500 lost

37.08 points, or 0.72%, to 5,113.38 and the Nasdaq Composite

lost 162.96 points, or 1.01%, to 15,965.57.

In addition, a survey from the University of Michigan showed

its preliminary reading on consumer sentiment and inflation

expectations were little changed in March while a separate

report said production at U.S. factories increased more than

expected in February.

The dollar index gained 0.1% to 103.48, recouping

most of the prior week's decline, with the euro up 0.02%

at $1.0883. Sterling weakened 0.2% to $1.273.

Against the Japanese yen, the dollar strengthened

0.49% to 149.05, despite expectations the Bank of Japan is

expected to end its negative interest rate policy at its meeting

next week.

MSCI's gauge of stocks across the globe

fell 5.37 points, or 0.70%, to 767.28 and was poised for its

third straight daily decline, the longest streak since the start

of the year.

The STOXX 600 index closed down 0.32%, while

Europe's broad FTSEurofirst 300 index fell 7.42 points,

or 0.37%.

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

1 basis point at 4.308% after reaching 4.322%, its highest since

Feb. 23. The 2-year note yield, which typically moves

in step with interest rate expectations, rose 3.4 basis points

to 4.7254%.

Oil prices succumbed to some profit taking, following strong

gains this week amid sharp declines in U.S. crude and fuel

inventories, drone strikes on Russian refineries and an increase

in energy demand forecasts.

The oil benchmarks were on track to close out the week with

a gain of more than 3%, even as U.S. crude was trading

0.37% lower on the day at $80.96 a barrel and Brent fell

0.21% to $85.23 per barrel.