GLOBAL MARKETS-U.S. rate hike prospects lift dollar, Treasury yields

* Dollar gains on Fed rate hike hopes, data

* U.S. Treasury yields mostly up

* Dollar pushes commodities to near six-year lows

By Michael Connor

NEW YORK, July 30 (Reuters) - The dollar traded at one-week

highs and shorter-term U.S. Treasury yields rose on Thursday as

accelerating U.S. gross domestic product data encouraged bets

that policymakers will start hiking U.S. interest rates as soon

as September.

Wall Street was mostly lower in part due to soft corporate

earnings reports, while oil prices shrugged off earlier drag

from the dollar's gains and edged higher on an unexpectedly big

drop in U.S. oil inventories.

The euro fell 0.70 percent against the dollar to $1.0909,

which helped the dollar index rise 0.70 percent at 97.641

after touching 97.773, its highest since July 22.

"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 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. Price declines were largest in 3-year

and 5-year maturities, while benchmark 10-year Treasuries

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

yield to 2.2697 percent.

Wall Street's Dow Jones industrial average was last

off 1.96 points, or 0.01 percent, to 17,749.43, the S&P 500

was down 0.54 points, or 0.03 percent, to 2,108.03 and

the Nasdaq Composite rose 17.30 points, or 0.34 percent,

to 5,129.04.

Procter & Gamble's 3.7 percent fall dragged down the

Dow, after the company reported a sixth straight quarter of

lower sales. Facebook (NasdaqGS: FB - news) shares fell 3.9 percent after the

social media company's profit fell.

Europe's main stock markets held on to a third

day of 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 boosted the mood.

The pan-European FTSEurofirst 300 closed up 0.6

percent.

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 $5,259 a tonne.

The broad Thomson Reuters CRB commodities index

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

flirted with a 5-1/2-year low at $1,089 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, fared slightly better, having

bounced on Wednesday following an unexpectedly large weekly

drawdown in U.S. crude inventories.

Front-month Brent crude futures were up 0.20 percent

at $53.47 a barrel, and U.S. crude was near flat at $48.80

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 and Meredith Mazzilli)