* U.S. stocks lower after Fed falls short of dovish expectations
Euro falls the most in 6 months versus U.S. dollar
* Treasuries prices down after strong U.S. data
By Rodrigo Campos
NEW YORK, Oct 31 (Reuters) - The euro fell on Thursday while the U.S. dollar rose on diverging market views about next moves from top central banks, while the greenback's advance sent gold prices on their largest drop in three weeks.
Wall Street stocks traded slightly lower, a gauge of global equities fell the most in a week, and crude prices fell alongside other risk assets.
The dollar rose for a fifth straight session against a basket of major currencies as the Federal Reserve's latest outlook was perceived as less dovish than expected.
The greenback's gains extended as the euro fell after a drop in eurozone inflation to its lowest in nearly four years raised speculation the European Central Bank will further ease monetary policy.
Market expectations that the Fed would continue its $85 billion a month bond-buying stimulus well into next year were not fully met, and some now see a chance for the Fed to begin a wind-down in December.
The current pace of purchases has pressured the dollar and Treasury yields lower, while boosting equities and some commodities. Those trends were partially reversing on Thursday.
"We would caution dollar bears as some (news) articles are suggesting that a December taper is a real possibility, so there is some added upside risk to the dollar, particularly since the market is now positioned for a first half 2014 taper," said Camilla Sutton, chief currency strategist at Scotiabank.
U.S. stocks fell but were not far from record highs set earlier this week. Major indexes turned lower after the Fed statement on Wednesday, but coming off a recent rally the selling was not seen as a capitulation.
"Nobody was surprised by the lack of action by the Fed, but there was a lack of clarity that was disappointing," said Rex Macey, who helps oversee $20 billion as chief investment officer at Wilmington Trust.
"There is reason for caution at these levels, but nobody seems to be euphoric, so I don't think people need to get too defensive at this point."
The Dow Jones industrial average fell 63.19 points or 0.4 percent, to 15,555.57, the S&P 500 lost 6.68 points or 0.38 percent, to 1,756.63 and the Nasdaq Composite dropped 18.759 points or 0.48 percent, to 3,911.861.
The pan-European FTSEurofirst 300 index was up 0.1 percent after climbing to a five-year high in the previous session. The index remained on track to record a second straight month of gains with a rise of more than 3 percent in October.
The MSCI world equity index dropped 0.6 percent, with its October gain near 4 percent.
U.S. Treasuries prices turned negative after the pace of business activity in the U.S. Midwest jumped in October, exceeding expectations.
Benchmark 10-year Treasury notes last traded down 7/32 in price with a yield of 2.553 percent. They were up as much as 7/32 in price with a yield of 2.502 percent earlier.
CURRENCIES, COMMODITIES RATTLED
The euro fell the most in six months versus the dollar, down 1 percent at $1.3601. The dollar index added 0.4 percent to trade above 80 for the first time in two weeks and extended its five-day streak of gains to a total 1.2 percent advance.
The euro was hurt further after figures from Eurostat showed inflation in the 17-country bloc unexpectedly dropped to a near four-year low in October and unemployment stayed at a record high in September. German retail and French consumer data also came in below par.
With the ECB aiming for inflation just under 2 percent, Marie Diron, a senior economic advisor for Ernst & Young, said the central bank may now have to start considering action.
"The ECB can provide more liquidity and also express unease about the strength of the euro to try to avoid the euro zone slipping into deflation," she said.
In commodities markets, the dollar strength weighed. Spot gold faded after rising the most in a week at one stage on Wednesday. It fell 1.3 percent to $1,324.71 an ounce on Thursday while Brent crude fell 0.8 percent to $108.97 a barrel and U.S. crude fell 0.5 percent to $96.29.