GLOBAL MARKETS-Stocks dip, bonds fall as CPI keeps Fed on course

* Despite dip, stocks set to close week near record highs

* Yellen speech likely to bolster case for 2015 rate rise

* Brent crude oil slips ahead of long weekend (Updates to U.S. market open, adds byline, dateline; previous LONDON)

By Herbert Lash

NEW YORK, May 22 (Reuters) - Global equity markets dipped modestly Friday but remained near record highs, while the yield on U.S. government debt rose as a gain in core consumer prices in April should keep the Federal Reserve on course to raise interest rates later this year.

Fed Chair Janet Yellen is expected to acknowledge recent sluggishness in the U.S. economy, including a near-stagnant performance in the first few months of the year, in a speech slated for 1:00 p.m. ET (1700 GMT).

Yellen also will highlight the economy's steady job growth, seen as keeping the Fed on track for its first interest-rate hike in nearly a decade. A Labor Department report on the Consumer Price Index bolstered that idea on Friday.

The so-called core CPI (Other OTC: CPICQ - news) , which strips out food and energy costs, rose 0.3 percent in April, the largest gain since January 2013. In the 12 months through April, the core CPI advanced 1.8 percent after a similar gain in March.

"This enables the Fed to move rates higher incrementally sooner. They have less room to wait," said Lou Brien, market strategist at DRW Trading in Chicago.

The benchmark 10-year U.S. Treasury note was down 8/32 in price, pushing its yield up to 2.2145 percent.

MSCI (NYSE: MSCI - news) 's all-country world index, a measure of the stock performance in 46 countries, slid 0.21 percent, slightly below an all-time high set in late April.

The pan-European FTSEurofirst 300 index of top regional shares rose 0.09 percent to 1,621.30 points.

Wall Street was mixed in early trading, with the Dow Jones industrial average down 18.2 points, or 0.1 percent, at 18,267.54, and the benchmark S&P 500 down 0.8 points, or 0.04 percent, at 2,130.02. The Nasdaq Composite added 7.83 points, or 0.15 percent, to 5,098.63.

Oil prices fell as worries over the impact of war in the Middle East on crude supplies were outweighed by reports of profit-taking ahead of a long weekend.

Monday is Memorial Day in the United States and a public holiday in much of Europe, and many markets will be closed.

July Brent crude was down 83 cents at $65.71 a barrel. U.S. crude for July was down 68 cents at $60.04 a barrel.

The dollar turned higher on the U.S. inflation report, which indicated underlying pressures are building and bolstered the case for the Fed to raise interest rates later this year.

The dollar was up 0.38 percent to 121.48 yen, while the euro fell 0.86 percent to $1.1016. The dollar index rose 0.93 percent to 96.141.

The first fall in German business morale in seven months, albeit a shallower dip than forecast, supported demand for German government bonds.

German 10-year yields, the benchmark for euro zone borrowing costs, were on track for their first week of declines out of five.

They steadied after a dramatic sell-off that drove up Bund yields some 55 basis points from a record low of 0.05 percent in mid-April. The 10-year traded to yield 0.61 percent. (Editing by Bernadette Baum)