GLOBAL MARKETS-Dollar, U.S. yields rise on rate-hike prospects

(Updates to North American trading, latest prices, quotes and

changes byline and dateline; previous LONDON)

* Dollar gains on Fed rate hopes, data

* U.S. Treasury yields up

* Dollar pushes commodities to near six-year lows

By Michael Connor

NEW YORK, July 30 (Reuters) - The dollar traded near weekly

highs and U.S. Treasury yields rose on Thursday as U.S. gross

domestic product data showed a pick-up in consumer spending and

encouraged bets that hikes in U.S. interest rates will start as

soon as September.

Wall Street was off on disappointment that GDP data was

slightly below forecasts, while oil prices shrugged off an

earlier drag from the dollar's gains and edged ahead on an

unexpectedly big drop in U.S. oil inventories.

The euro fell 0.55 percent against the dollar to $1.0924,

which helped the dollar index rise 0.55 percent at 97.511

after touching 97.591, its highest so far this week.

"The latest GDP report confirms the Fed's narrative that the

first-quarter weakness was transitory. The bar for them to

hiking rates is not very high," said Ian Gordon, G10 currency

strategist at Bank of America Merrill Lynch in New York

Data on Thursday showed economic growth in the United States

accelerated in the second quarter, backed by solid consumer

demand, to a 2.3 percent annual rate. While slightly below

economists' expectations for 2.6 percent growth, the data still

pointed to firming domestic fundamentals.

The U.S. Federal Reserve on Wednesday described the economy

as expanding "moderately," with improvements in housing and the

labor market. That left the door open for a possible hike in

interest rates in September, which would be the first rise since

2006.

Treasury prices, which move in the opposite direction of

yields, were mostly off. Benchmark 10-year Treasuries

were down 2/32 of a point in price, pushing the

yield to 2.2679 percent.

The Dow Jones industrial average fell 74.99 points,

or 0.42 percent, to 17,676.4, the S&P 500 declined 8.97

points, or 0.43 percent, to 2,099.6 and the Nasdaq Composite

eased 25.61 points, or 0.5 percent, to 5,086.12.

Nine of the 10 major S&P sectors fell, with the consumer

staples index's 0.61 percent fall leading decliners.

Europe's main stock markets held on to a third

day of modest gains as results from Siemens (BSE: SIEMENS4.BO - news) , Nokia (Swiss: 472672.SW - news)

and Deutsche Bank (Xetra: 514000 - news) and a rise in euro

zone-wide sentiment data boosted the mood.

With the dollar flexing its muscles again, commodity markets

were back under pressure, with copper, considered a

bellwether for global economic activity, trading near a six-year

low at $5,268 a tonne.

The broad Thomson Reuters CRB commodities index

hit a fresh six-year low before recovering some ground. Gold was

flirting with a 5-1/2-year low at $1,093 an ounce as its appeal

ahead of potentially higher global interest rates remained in

question.

Oil prices, smarting from rising U.S. shale oil output and

an easing of sanctions on Iran, were faring slightly better,

having bounced on Wednesday following an unexpectedly large

weekly drawdown in U.S. crude inventories.

Front-month Brent crude futures were pegged up 1

percent at $53.90 a barrel, and U.S. crude was up to $49.18

having pulled away from Tuesday's 4-1/2-month low. They have

both lost more than 15 percent in July.

(Reporting by Michael Connor in New York; Editing by Bernadette

Baum)