GLOBAL MARKETS-Stocks dip, dollar climbs after data, Powell comments

Updates at 4:12 p.m. ET/2112 GMT

By Chuck Mikolajczak

NEW YORK, Nov 14 (Reuters) - A gauge of global stocks fell for a third straight session on Thursday while the dollar advanced after U.S. data and comments from Federal Reserve Chair Jerome Powell pointed to a slower path of rate cuts from the central bank.

The Labor Department said initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 217,000 for the week, slightly below expectations for 223,000 by economists polled by Reuters, suggesting the weak October government payrolls report was an anomaly.

In the latest inflation reading, the producer price index for final demand rose 0.2% last month, matching expectations, after an upwardly revised 0.1% gain in September.

The data comes after Wednesday's consumer price index increased as expected in October amid higher costs for shelter such as rents.

In the 12 months through October, the PPI increased 2.4% after advancing 1.9% in September.

Powell said ongoing economic growth, a solid job market, and inflation that remains above the 2% target mean the U.S. central bank does not need to rush to lower interest rates and can deliberate carefully.

"The comments from Powell put more cold water on what used to be a very optimistic outlook on the path for rate cuts," said Adam Hetts, global head of multi-asset at Janus Henderson Investors in Denver.

"However, we can't take for granted that inflation and labor are in balance so this is an encouraging message on the economy."

Stocks initially rallied in the wake of the U.S. presidential election. Each of Wall Street's major indexes closed at records on Monday, but have stalled in recent days as bond yields have moved to four-month highs. U.S. stocks closed lower on Thursday.

The Dow Jones Industrial Average .DJI fell 207.33 points, or 0.47%, to 43,750.86, the S&P 500 .SPX fell 36.21 points, or 0.60%, to 5,949.17 and the Nasdaq Composite .IXIC fell 123.07 points, or 0.64%, to 19,107.65.

Investors have gravitated toward assets expected to benefit from U.S. President-elect Donald Trump's policies in his second term after he pledged to impose high tariffs on imports from key trading partners, lower taxes and loosen government regulations.

But bond yields and the dollar have also surged recently on concerns that while Trump's policies will spur growth, they may also rekindle inflation after a long battle against price pressures following the COVID-19 pandemic. In addition, tariffs could lead to increased government borrowing, further ballooning the fiscal deficit and cause the Fed to alter its course of monetary policy easing.

MSCI's gauge of stocks across the globe .MIWD00000PUS fell 4.50 points, or 0.53%, to 850.35 and was poised for a third straight daily decline after five consecutive sessions of gains.

European shares rebounded from three-month lows, led by energy and tech stocks after a round of largely positive corporate earnings. The STOXX 600 .STOXX index closed up 1.08%.

The dollar index =USD, which measures the greenback against a basket of currencies, rose 0.45% to 106.94, with the euro EUR= down 0.41% at $1.052. The greenback is on pace for its fifth straight session of gains.

Against the Japanese yen JPY=, the dollar strengthened 0.57% to 156.34. Sterling GBP= weakened 0.38% to $1.2658.

Expectations for more Fed rate cuts have been dialed back over the past few weeks, but have become more volatile recently. Expectations for a 25 basis point cut at the Fed's December meeting were at 58.7%, down from 82.5% in the prior session, according to CME's FedWatch Tool.

The yield on benchmark U.S. 10-year notes US10YT=RR rose 0.2 basis points to 4.453%, erasing declines after Powell's comments.

Earlier in the day, Fed Governor Adriana Kugler said the central bank has made considerable progress toward achieving its job and inflation goals, while stopping short of offering firm guidance over what that means for the near-term monetary policy outlook.

Richmond Federal Reserve President Tom Barkin said high union wage settlements and the possible tariff increases are among the uncertainties that could make Fed officials more cautious about thinking they have won their battle against high inflation.

U.S. crude CLc1 settled up 0.39% to $68.70 a barrel and Brent LCOc1 rose to settle at $72.56 per barrel, up 0.39% on the day, in part due to dollar strength and as rising U.S. crude inventories added to concerns of oversupply.

(Reporting by Chuck Mikolajczak, additional reporting by Sinéad CarewEditing by Alexandra Hudson and Marguerita Choy)

((charles.mikolajczak@tr.com; @ChuckMik;))