(Updates prices to late U.S. afternoon following oil settlement)

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Global stock index sticks close to Thursday's record

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Consumer sentiment dips to lowest since May

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Dollar rises with Treasury yields

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Gold trading near record highs

By Sinéad Carew and Iain Withers

NEW YORK/LONDON, Sept 12 (Reuters) - MSCI's global

equities index stayed close to Thursday's record levels while

U.S. Treasury yields rose on Friday after going into reverse in

the prior session when expectations climbed for U.S. rate cuts.

The University of Michigan's Surveys of Consumers showed that

U.S. consumer sentiment fell for a second straight month in

September to its lowest point since May as consumers saw rising

risks to business conditions, the labor market and inflation.

Consumer inflation expectations for the next year stayed at

4.8% but inflation expectations for the next five years rose to

3.9% from 3.5% last month.

"The University of Michigan sentiment study came in worse

than expected and more importantly inflation expectations

remained pretty high. That's sending yields a little higher,"

said Jack Ablin, founding partner and chief investment

strategist at Cresset Capital.

"Investors worry that expectations dictate reality and

perhaps consumers will act accordingly if they expect inflation

to be higher than usual ... and just perpetuate the inflation

hamster wheel."

Wall Street was a mixed bag after all three of its main indexes

registered record closing highs on Thursday, when investors

reacted bullishly to weaker-than-expected jobs data by ramping

up bets that the Federal Reserve would make three rate cuts in a

row, including a cut on September 17 after its meeting.

"The market feels a little stretched and toppy. And now

investors in the market are going to focus on next Wednesday and

exactly what Jay Powell says, how he says it. Does he sound more

dovish? What lines did he delete? What lines did he add?," said

Kenny Polcari, partner and chief market strategist at SlateStone

Wealth in Jupiter, Florida, referring to Fed Chair Jerome

Powell's press conference and the Fed's written statement.

"Rates are going lower for sure but I do think the market

has gotten ahead of itself in terms of valuation."

Thursday's U.S. consumer price report had been seen as the last

major hurdle before the Fed meeting. But while prices showed a

bigger-than-expected increase, market participants kept their

focus on a separate report that showed a sharp rise in

unemployment claims.

On Wall Street at 02:52 p.m. the Dow Jones Industrial

Average fell 149.75 points, or 0.32%, to 45,958.25, the

S&P 500 rose 10.97 points, or 0.17%, to 6,598.44 and the

Nasdaq Composite rose 124.18 points, or 0.56%, to

22,167.06.

MSCI's gauge of stocks across the globe

rose 2.19 points, or 0.23%, to 973.64 while the

pan-European STOXX 600 index closed down 0.09%, after

giving up earlier gains.

In currencies, the U.S. dollar rose on Friday, a day after

falling on a surge in U.S. jobless claims and modest inflation,

as investors prepared for interest rate cuts after a roughly

nine-month hiatus.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

rose 0.01% to 97.56.

Against the Japanese yen, the dollar strengthened 0.18%

to 147.47. U.S. and Japanese finance ministers on Friday

released a statement reaffirming that neither country would

target currency levels in their policies.

The euro was up 0.05% at $1.1739. On Thursday the

European Central Bank had kept rates unchanged and signalled

that it was in a "good place" on policy. After the meeting, ECB

sources told Reuters the December meeting would be the most

realistic time frame to debate whether another cut was needed to

buffer the economy.

Britain's economy recorded zero monthly growth in July, in line

with forecasts but showing a sharp drop in factory output,

weighing on sterling, which weakened 0.04% to $1.3567.

In energy markets, oil prices settled higher after a Ukrainian

drone attack on a Russian port suspended loadings, outweighing

pressure from oversupply concerns and weaker U.S. demand risks.

U.S. crude settled up 0.51% or 32 cents at $62.69 a

barrel and Brent ended at $66.99 per barrel, up 0.93%,

or 62 cents on the day.

In precious metals, gold was showing its fourth weekly gain in a

row and trading close to its Tuesday record high, as investors

looked ahead to U.S. rate cuts.

Spot gold rose 0.41% to $3,648.59 an ounce. It had

hit a record high of $3,673.95 on Tuesday.