GLOBAL MARKETS-Financial stocks drag on market on Deutsche Bank fine risk, oil down

(Corrects to clarify U.S. Department of Justice is demanding a $14 billion settlement in talks with Deutsche Bank (LSE: 0H7D.L - news) , but has not yet levied a fine)

* Wall Street weighed down by banks, energy stocks

* European markets lower as Deutsche Bank fine risk hits banks

* Rising rents, healthcare costs boost U.S. consumer prices

* Yields, dollar rise on inflation data

* Oil drops as growing supplies stoke glut concern

By Saqib Iqbal Ahmed

NEW YORK, Sept 16 (Reuters) - The possibility of a $14 billion fine for Deutsche Bank and a slide in oil prices hit financials and energy stocks on Friday, leading most global stock indexes lower.

U.S. data showing a strong increase in August consumer prices bolstered those arguing for the Federal Reserve to raise interest rates later this year, helping send U.S. Treasury yields and the dollar higher.

Stocks fell as investors dumped shares of banks in North America and Europe after the U.S. Department of Justice proposed Deutsche Bank pay $14 billion to settle an investigation of its selling of mortgage-backed securities.

Deutsche Bank, whose shares dropped roughly 8.5 percent, said it would fight the demand.

MSCI (NYSE: MSCI - news) 's world stocks index was down 0.57 percent, on pace for a second straight weekly loss.

Energy share prices were cut by a drop in oil prices as rising Iranian exports and returning supplies from Libya and Nigeria fueled concerns a global glut would persist.

Brent crude was down 1.4 percent at $45.94 a barrel, while U.S. crude was down 1.9 percent at $43.07.

"When oil goes down, investors get nervous about the risk of default in the energy patch," said Thomas Wilson, senior investment manager at Brinker Capital in Philadelphia.

The Dow Jones industrial average fell 66.63 points, or 0.37 percent, to 18,145.85, the S&P 500 lost 8.61 points, or 0.4 percent, to 2,138.65 and the Nasdaq Composite dropped 8.39 points, or 0.16 percent, to 5,241.30.

The S&P energy index was down 0.72 percent while the S&P financials index was down 0.83 percent.

European shares were headed for their worst weekly performance in three months. Europe's broad FTSEurofirst 300 index was down 0.79 percent at 1,328.49.

U.S. Treasury yields, meanwhile, rose after data showed U.S. consumer prices increased more than expected in August, pointing to a steady build-up of inflation.

Benchmark 10-year notes were last up 3/32 in price to yield 1.69 percent, after trading at 1.67 percent before the data.

The so-called core CPI (Other OTC: CPICQ - news) , which strips out food and energy costs, increased 2.3 percent in the 12 months through August, above the Fed's target of 2 percent annual inflation.

The uptick in inflation is likely to be welcomed by Fed officials when they meet next Tuesday and Wednesday to deliberate on monetary policy.

"It certainly is another thing that could help them increase their trend toward normalization," said Mary Ann Hurley, vice president in fixed income trading at D.A. Davidson in Seattle.

Futures traders are pricing in a 51.8 percent chance the Fed will raise rates at its December meeting, up from 47.5 percent on Thursday, according to the CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch Tool.

While the inflation data pushed the dollar to a more than two-week high against a basket of major currencies, uncertainty ahead of a Bank of Japan policy meeting on Wednesday limited the dollar's gains against the yen.

The dollar index, which measures the greenback against a basket of six major currencies, was up 0.69 percent to 95.941.

Spot gold prices slid 0.36 percent to $1,309.01, a two-week low to a two-week low. (Reporting by Saqib Iqbal Ahmed; Additional reporting by Karen Brettell in New York and Yashaswini Swamynathan in Bengaluru; Editing by Dan Grebler)