GLOBAL MARKETS-Stocks stays close to record highs; dollar and bond yields turn higher

By Sinéad Carew and Iain Withers

LONDON/SYDNEY, Sept 12 (Reuters) - MSCI's global equities index stayed close to Thursday's record levels while the dollar and U.S. Treasury yields rose on Friday after going into reverse in the prior session when expectations climbed for U.S. rate cuts.

Gold was on track for a fourth weekly gain in a row and traded near record levels, potentially signalling persistent investor uncertainties about the global economy. GOL/

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.

European stocks gave up earlier gains to trade slightly lower. Stock markets across Asia made strong gains and Chinese stocks hit a 3-1/2 year high, spurred by AI-related earnings growth expectations.

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 Sept 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 to the Federal Reserve cutting interest rates next week. 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 10:53 a.m. the Dow Jones Industrial Average .DJI fell 181.21 points, or 0.39%, to 45,927.30, the S&P 500 .SPX rose 2.16 points, or 0.03%, to 6,589.63 and the Nasdaq Composite .IXIC rose 88.75 points, or 0.40%, to 22,131.82.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 1.11 points, or 0.11%, to 972.56.

The pan-European STOXX 600 .STOXX index fell 0.05% after rising earlier in the day.

In currencies, the dollar pared some gains after signs of weakening consumer sentiment. The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.13% to 97.68.

Against the Japanese yen JPY=, the dollar strengthened 0.31% to 147.65 after U.S. and Japanese finance ministers on Friday released a statement reaffirming that neither country would target currency levels in their policies.

The euro EUR= was down 0.09% at $1.1722. On Thursday the European Central Bank 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 GBP= which fell 0.13% to $1.3555.

In U.S. Treasuries, the yield on benchmark U.S. 10-year notes US10YT=RR rose 5.3 basis points to 4.064%, from 4.011% late on Thursday while the 30-year bond US30YT=RR yield rose 4.5 basis points to 4.696%.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 2.9 basis points to 3.558%, from 3.529%.

In energy markets, oil prices rose by nearly 2% on Friday 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 CLc1 rose 1.35% to $63.21 a barrel and Brent LCOc1 rose to $67.34 per barrel, up 1.46% on the day.

In precious metals, spot gold XAU= rose 0.4% to $3,648.39 an ounce. U.S. gold futures GCc1 rose 0.31% to $3,648.00 an ounce.