* European stocks extend Wednesday's gains, Japan closes up
* Dollar index up, gains vs yen and euro
* Oil falls for third day; copper and gold down
(Updates after U.S. open, changes byline, previous dateline
By Sinead Carew
NEW YORK, March 2 Wall Street fell as investors
took a breather on Thursday after a record day, while the dollar
strengthened on positive U.S. data and growing expectations the
Federal Reserve will raise interest rates this month.
Federal Reserve Governor Lael Brainard said late on
Wednesday that an improving global economy and a solid U.S.
recovery meant it would be "appropriate soon" to raise rates.
The comments followed hawkish statements from two central
bankers earlier in the week. Fed Chair Janet Yellen is due to
speak on the economic outlook in Chicago on Friday.
On top of this, data showed the number of Americans filing
for unemployment benefits fell to near a 44-year-low last week,
pointing to further tightening of the labor market.
"We’ve had this great run of data in the U.S. and the
expectation on a March rate move has gone up,” Steven Englander,
global head of foreign exchange strategy at Citigroup in New
Federal fund futures prices suggest markets now see a
75-percent chance of a 25 basis point hike in March up from 66
percent on Wednesday and from 35 percent on Tuesday, according
to CME Group's FedWatch tool.
At 10:38 a.m. ET, the Dow Jones Industrial Average
was down 17.21 points, or 0.08 percent, to 21,098.34, the S&P
500 had lost 6.98 points, or 0.29 percent, to 2,388.98
and the Nasdaq Composite had dropped 19.73 points, or
0.33 percent, to 5,884.30.
The FTSEurofirst 300 index rose 0.12 percent but
MSCI's global stocks index was down 0.2 percent
after touching another intraday record high.
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 0.05 percent, while Japan's Nikkei
closed up 0.9 percent, after hitting a 14-month high, as a
weaker yen helped exporters.
The dollar index, which measures the greenback
against a basket of six major currencies, was up 0.3 percent, at
The dollar has strengthened even as many analysts see
limited further gains for the currency due to worries about the
impact of higher rates and a stronger dollar on global growth.
The greenback was last up 0.64 percent against the Japanese
yen at 114.43, the highest since Feb. 15, while the euro
fell 0.3 percent to $1.0516.
In fixed income markets, U.S. Treasury yields pushed higher
on the prospect of higher rates. U.S. 2-year yields extended
their climb and hit their highest since Aug 2009 of 1.32 percent
while 3-year yield hit a nearly 11-week high of 1.598 percent.
The 10-yr yield hit a 2-week high of 2.49 percent.
Oil prices fell for a third consecutive day after a record
build-up in U.S. crude inventories and data showing Russian oil
production was unchanged last month. Brent crude fell
1.6 percent to $55.46 a barrel while U.S. crude was down 1.6
percent at $52.97.
The dollar put metals prices under pressure. Copper
fell 1.3 percent to $5,941 a tonne while gold fell 0.6
percent to $1,240.66 an ounce.
(Additional reporting by Karen Brettell and Samuel Forgione in
New York, Nigel Stephenson, John Geddie, Dhara Ranasinghe and
Christopher Johnson in London, Hideyuki Sano in Tokyo; Editing
by Hugh Lawson and Nick Zieminski)