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GLOBAL MARKETS-U.S. stocks decline with transports; bond yields up

* Investors detect dovishness in Fed inflation language

* S&P 500 turns down in New York afternoon trading

* Oil extends recent run higher (Updates with U.S. stocks down in afternoon trading)

NEW YORK, July 27 (Reuters) - U.S. stocks fell, weighed down by technology and transportation shares on Thursday, while U.S. Treasury yields climbed as investors assessed the Federal Reserve's recent statement that it is closer to paring its balance sheet.

The S&P 500 was trading lower along with the Nasdaq, while MSCI's 47-country All World share index edged lower after hitting a record high earlier.

The Dow Jones transportation average was down 3.4 percent, on track for its biggest daily percentage decline since June 2016 and Britain's vote to exit the European Union, while the S&P technology index was down 1.4 percent.

"The general sentiment of the market coming into the day was that transportation stocks are telling us something that we're not paying attention to," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

"You've got a general feeling a lot of good news is priced in to this market," Hogan said.

The U.S. central bank said on Wednesday it expected to start winding down its massive holdings of bonds "relatively soon," despite striking a cautious tone on low inflation.

Many analysts and traders expect the Fed to announce its balance sheet reduction plans when its policymakers meet in September.

Results from Facebook and Verizon helped boost U.S. stocks earlier in the session. With equity markets at record levels, investors have been counting on robust company earnings to justify relatively expensive stock valuations.

The Dow Jones Industrial Average was up 24.89 points, or 0.11 percent, to 21,735.9, the S&P 500 had lost 10.22 points, or 0.41 percent, to 2,467.61 and the Nasdaq Composite had dropped 63.13 points, or 0.98 percent, to 6,359.62.

The biggest one-day drop in AstraZeneca shares, following a drug study failure, dominated trading in Europe though a handful of results helped broader indexes nudge higher. The pan-European STOXX 600 ended down 0.11 percent.

The U.S. dollar rose against the euro after solid U.S. economic data.

Data showed that new orders for key U.S.-made capital goods unexpectedly fell in June, but a fifth straight monthly increase in shipments suggested that business spending on equipment supported economic growth in the second quarter.

The euro on Thursday fell 0.5 percent against the dollar, slipping back below $1.17.

The dollar was down 0.1 percent against the yen to 111.09 yen.

The dollar had fallen on Wednesday after the Fed's policy statement suggested the Fed was in no hurry to raise interest rates again.

A Reuters poll showed most primary dealers still expect the Fed's next rate rise to be in December. But rate futures are pricing in less than a 50 percent chance of a hike by then, compared to just over 50 percent before the Fed's meeting.

Benchmark 10-year notes were last down 8/32 in price to yield 2.31 percent, up from 2.28 percent on Wednesday.

Oil prices extended recent gains in the wake of Wednesay's surprising slump in U.S. inventories that encouraged hopes that a global crude glut would recede.

Brent crude futures were up 52 cents to settle at $51.49 a barrel, while U.S. crude was up 29 cents to $49.04.

(Additional reporting by Marc Jones in London, Sinead Carew in New York, Wayne Cole in Sydney; Editing by Bernadette Baum and Nick Zieminski)