(Updates with close of European markets)

*

Trump picks Kevin Warsh as new Fed chair

*

Global stocks fall, still set for weekly gain

*

US inflation data hotter than expected

By Chuck Mikolajczak

NEW YORK, Jan 30 (Reuters) - Global stocks fell for a

second straight session on Friday, while the dollar

strengthened, after U.S. President Donald Trump tapped former

Federal Reserve governor Kevin Warsh as the next chair of the

central bank, while a reading on inflation was stronger than

expected.

Warsh is a frequent critic of the Fed and is seen as an

advocate of lower interest rates, but also as ‌someone who would

stop well short of the more aggressive easing associated with

some other potential nominees. He will take over when Jerome

Powell's term ends in May, if his nomination passes a closely

divided Senate.

Trump said it would ​be inappropriate to ask Warsh whether he

would cut interest rates, but added he was confident Warsh was

inclined to lower borrowing costs.

Wall Street stocks were ‍lower as economic data showed the

Producer Price Index (PPI) for final demand surged 0.5% last

month, above the 0.2% estimate of ⁠economists polled by Reuters,

after an unrevised ⁠0.2% gain in November. Businesses appeared to

be passing on higher costs from import tariffs.

Also weighing on equities was a decline of nearly 1% in Apple ( AAPL )

after the iPhone maker reported quarterly results.

"Maybe some of the ‌angst is just the fact that you've got

uncertainty, you've got a new nominated ​chair, we'll have new

priorities, perhaps new monetary direction, and that's an

element of angst ... but nonetheless, on balance, his selection

was pretty widely telegraphed among others on the short list,"

said Terry Sandven, chief equity strategist at U.S. Bank Asset

Management in Minneapolis.

"Today's volatility, I think ⁠it's more of a function of

inflationary indicators that are showing some persistency and

then ‍secondly, you've got earnings ​that are being digested and

the question on earnings is the profitability of the massive

capex levels that are being spent."

The Dow Jones Industrial Average fell 223.53 points,

or 0.46%, to 48,846.14, the S&P 500 shed 24.45 points, or

0.35%, to 6,944.85 and the Nasdaq Composite lost 153.11

points, or ‍0.65%, to 23,532.01.

The benchmark S&P index was on track for its first weekly

gain in three weeks.

MSCI's gauge of stocks across the globe

declined 5.74 points, or 0.55%, to 1,044.45, but was on track

for a weekly gain and the biggest monthly percentage gain since

September.

The pan-European STOXX 600 index closed up 0.64%,

holding gains after Trump's Fed announcement, as strong earnings

have helped propel the index to its biggest monthly gain since

May. The index registered its seventh straight monthly gain, its

longest streak since 2021.

In currencies, the dollar was higher in the wake of the

Warsh announcement and inflation data, continuing to show signs

of stabilizing after recent weakness.

The dollar index, ​which measures the ‍greenback

against a basket of currencies, rose 0.57% to 96.73, with the

euro down 0.54% at $1.1904. The dollar was still on track

for a second straight weekly decline and third straight monthly

drop.

Longer-dated U.S. Treasury yields edged higher, with the

yield on the benchmark U.S. 10-year note up 1.2

basis points ​to 4.239%, on track for a second straight monthly

advance. It would be the first consecutive monthly gains since

early 2024.

Market expectations for the path of rate cuts were little

changed after the Warsh announcement, not pricing in a greater

than 50% chance for a cut until the central bank's June meeting,

according to CME's FedWatch Tool.

St. Louis Federal Reserve President Alberto Musalem said the

U.S. central bank does not need to cut interest rates further

unless the job market starts to deteriorate or inflation falls

as the current policy rate of 3.50-3.75% is neutral.

The strength in the dollar helped cool the recent rally in

metals. The precious metal tumbled below $5,000 per ounce after

hitting a record of nearly $5,600 on Thursday. Spot gold

was last down 9.41% at $4,887.21 ​an ounce, and poised to snap a

three-week streak of gains. It has rallied nearly 14% in

January, its strongest monthly performance since September 1999.

Spot silver plummeted 27.27% to $84.45 an ounce.

U.S. crude fell 0.75% to $64.93 a barrel and Brent

fell to $70.63 per barrel, down 0.11% on the day, after

Trump said on Thursday he was planning to speak with Iran's

leaders, even as the Pentagon prepared for possible military

strikes.