* Wall St loses gains as data raises rate hike chances
* Oil prices turn negative as traders take profits
* Miners help drive European shares to three-week high
* Dollar, U.S. Treasury yields rise (Updates with afternoon U.S. trading)
By Lewis Krauskopf
NEW YORK, Feb 26 (Reuters) - The U.S. dollar jumped on Friday and Wall Street's stock rally faded as fresh economic data kept alive Federal Reserve rate increases, while oil prices turned negative late in the session.
Wall Street shares were little changed in afternoon trading, underperforming a 1.6-percent rise for Europe's FTSEurofirst 300 stock index .FTEU3 . European equities were fueled by strength in mining shares as industrial metals such as copper CMCU3 and aluminum CMAL3 gained.
Treasury yields also rose after data showed U.S. consumer spending rose solidly in January and underlying inflation picked up by the most in four years. Earlier, a report showed U.S. gross domestic product growth was revised higher, to a 1.0 percent annual rate. equity markets off to a weak start in 2016 amid concerns about an economic slowdown, investors have been watching the Fed's next move after the central bank raised rates in December.
Federal funds futures implied traders see a 36-percent chance of the Fed raising rates in June and 53-percent chance in December, both above Thursday's levels, according to CME Group's (O:CME) FedWatch program.
"This information today, while actually good for Main Street, is less than good for Wall Street that has become addicted to the Fed's largesse," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
The Dow Jones industrial average .DJI was down 51.05 points, or 0.31 percent, at 16,646.24, while the S&P 500 .SPX lost 2.91 points, or 0.15 percent, at 1,948.79. The Nasdaq Composite .IXIC added 6.95 points, or 0.15 percent, at 4,589.16.
European equities rallied for a second day to a three-week high. gauge of global stock markets .MIWD00000PUS was up 0.1 percent. The index was set for its biggest two-week percentage increase since October.
With oil's steep 1-1/2-year slide, equities' performance has been tightly linked to the commodity's daily fluctuations as investors say oil has been seen as a proxy for the health of the global economy.
After an initial rally that pushed benchmark Brent crude prices to their highest level since early January, oil prices faded as players took profits on winning positions. crude CLc1 settled down 0.9 percent at $32.78 a barrel, while Brent settled down 0.5 percent at $35.10 a barrel. 10-year notes US10YT=RR were last down 22/32 in price to yield 1.771 percent, up from 1.70 percent late Thursday.
"We got some pretty surprising GDP data, an upward revision, and not too many people had pegged that," said Thomas Simons, a money market economist at Jefferies LLC in New York.
The dollar .DXY gained 0.9 percent against a basket of six currencies, while the euro EUR= dropped 0.9 percent against the greenback. fact that GDP was revised higher is a positive for the dollar this morning ... giving confidence to markets that the Fed may resume its tightening policy this year," said Sireen Harajli, currency strategist at Mizuho Bank Ltd in New York.