GLOBAL MARKETS-Wall St sets records on rates view; dollar rises

* S&P 500, DJI end week at record highs

* Dollar turns up on fatter U.S. bond yields

* Oil eases from $115 (Adds Wall Street record closing highs)

By Michael Connor

NEW YORK (Frankfurt: HX6.F - news) , June 20 (Reuters) - Wall Street equities rose on Friday for a sixth straight session and hit new highs, boosted by money managers convinced that U.S. policymakers will keep a lid on interest rates through 2016.

Prices of U.S. Treasuries steadied after early declines blamed on a weak sale of inflation-linked bonds, and the dollar rose as investors chased higher U.S. bond yields.

Oil prices backed away from nine-month peaks triggered by worries about the turmoil in Iraq but held at lofty levels.

U.S. equities rallied for a sixth straight session and took the benchmark Standard & Poor's 500 and Dow Jones industrial indices to record highs. For the week, the Dow was up about 1 percent and the S&P 500 gained 1.4 percent.

The Dow rose 25.62 points, or 0.15 percent, to end at 16,947.08. The S&P 500 gained 3.39 points, or 0.17 percent, to finish at 1,962.87. The Nasdaq Composite added 8.71 points, or 0.20 percent, to close at 4,368.04.

"There continues to be this hope that the economy improves, that growth improves. But for the markets, a slow steady growth environment is pretty much nirvana," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

Federal Reserve Chair Janet Yellen on Wednesday effectively cleared the way for more Wall Street gains by suggesting that interest rates will remain low through 2016, several top U.S. money managers told Reuters.

"What (we) have is a sweet combination of a self-sustaining, long-lasting economic expansion joined with a long-lasting monetary accommodation," said Steven Einhorn, vice chairman of hedge fund Omega Advisors Inc.

Most U.S. Treasuries ended little changed, though long bond prices rallied as investors focused on inflation risks two days after the Fed played down a recent uptick in consumer price pressures.

"There's the thought that maybe (the Fed) will let inflation run a little bit higher and not raise rates," said Dan Mulholland, managing director at BNY Mellon in New York.

Benchmark 10-year notes were last down 1/32 in price to yield 2.63 percent, up from 2.62 percent on Thursday. The notes yielded 3 percent at the beginning of the year. Prices of 30-year Treasuries were up 9/32 to yield 3.45 percent.

The higher yields helped the dollar, with the dollar index up 0.02 percent at 80.33. Against the yen, the dollar was last up 0.2 percent, at 102.12 yen, while the euro slipped 0.10 percent to $1.3597.

Brent oil prices backed away from a nine-month peak as concerns receded that violence in Iraq, OPEC's second-largest producer, might disrupt supplies. Brent dropped 42 cents to $114.66 from a high of $115.71 touched on Thursday. U.S. oil added 75 cents to $107.18. (Reporting by Michael Connor in New York; Editing by Dan Grebler and Leslie Adler)