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GLOBAL MARKETS-Dollar falls, Treasuries gain after U.S. data; Wall St off recent high

Angela Moon
Thursday, 16 Jan 2014 | 11:14 AM ET

recent high@

* U.S. Treasuries gain as inflation steady, bunds rally

* U.S. dollar skids but uptrend seen intact

* Oil falls below $107 as supply outlook improves

NEW YORK, Jan 16 (Reuters) - The dollar fell against the euro and the yen on Thursday, giving up early gains, while Treasury prices climbed after U.S. data showed inflation remained steady.

Wall Street opened lower, with the S&P 500 retreating from its most recent all-time high as investors grappled with the latest batch of corporate earnings and economic data.

After a lackluster start to the new year on concerns stock valuations may be over-extended, the S&P 500 rallied 1.6 percent in the past two sessions to set its first record high since Dec. 31.

The Dow Jones industrial average was down 97.67 points, or 0.59 percent, at 16,384.27. The Standard & Poor's 500 Index was down 6.57 points, or 0.36 percent, at 1,841.81. The Nasdaq Composite Index was down 7.08 points, or 0.17 percent, at 4,207.80.

"We've made a nice run and the market is entitled to consolidate and use sort of a 'wait-and-see' attitude as far as earnings are concerned," said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.

Among the major companies that reported on Thursday, Citigroup Inc fell 2.7 percent to $53.46 after its results, while Goldman Sachs edged down slightly.

Treasuries prices gained after U.S. inflation data came in as expected and amid strength in German government debt.

U.S. consumer prices rose by the most in six months in December but were in line with expectations, after producer price data on Wednesday surprised some investors by rising more than expected.

An unexpected drop in Australian employment boosted demand for Treasuries overnight. while German bunds also rallied.

"CPI come in at consensus... the market is being dragged up because of the strength in bunds," said Thomas di Galoma, co-head of fixed-income rates at ED&F Man Capital in New York.

Treasuries extended their gains after the Philadelphia Fed's index of business conditions in the U.S. Mid-Atlantic region fell to its lowest level since April.

Other data showed the number of Americans filing new claims for unemployment benefits fell for a second week last week, suggesting a sharp December step-down in job growth was likely to be temporary.

Benchmark 10-year Treasuries were last up 9/32 in price to yield 2.8488 percent.

The dollar fell to 104.28 against the yen, erasing a rebound that came after the greenback was battered by the surprisingly weak December U.S. non-farm payroll report at the end of last week. On Monday, the dollar fell to a four-week low of 102.85 against the yen.

The Australian dollar, meanwhile, tumbled against the U.S. unit to its lowest since August 2010 after a surprise fall in Australian employment raised the possibility of another cut in interest rates from the Reserve Bank of Australia.

In Europe, equities steadied just below a 5-1/2-year high, with mining shares boosted by output data and broker comments offsetting losses in retail and technology stocks.

The STOXX Europe 600 basic resources index rose 2.4 percent to the top of the sectoral gainers' list. A sharp rise in output helped Rio Tinto rise 3.4 percent and research notes helped BHP Billiton and Polymetal advance 3.8 percent and 5.8 percent.

The MSCI world index, which strips out the recently weak emerging markets, fell 0.2 percent..

In commodities markets, Brent crude oil fell below $107 a barrel as expectations of more supply from the Middle East and North Africa outweighed news of a large drop in U.S. crude stockpiles.

Huge volumes of crude from Iran and Libya have been blocked by political and civil disputes, but both countries may soon be able to send more into markets that are already well supplied.