(Updates to U.S. market open, adds details, changes dateline, previous LONDON)
* Wall St stocks edge lower; U.S. Q4 GDP disappoints
* Dollar up for second day, U.S. bond yields fall
* European shares dip on banks, UBS results underwhelms
* Oil prices fall as focus shifts to U.S. output
By Saqib Iqbal Ahmed
NEW YORK, Jan 27 (Reuters) - The U.S. dollar rose to a one-week high against the yen on Friday on hopes U.S. President Donald Trump's pro-growth policies will further bolster the economy, and a key index of global equity markets slipped as investors paused after a recent rally.
U.S. Treasury debt yields slipped as data showing disappointing U.S. economic growth in the fourth quarter spurred buying of U.S. government debt, while oil prices retreated as investors focused on production increases in the United States. greenback has climbed for two straight days, pulling it back from seven-week lows against a basket of major currencies, on the view it would gain from a rise in border tariffs, tax reform and future spending. Schamotta, director of global product & market strategy at Cambridge Global Payments in Toronto, said increasing expectations of tax reforms and fiscal stimulus, which support the dollar, are temporarily soothing concerns about Trump's stance on trade protectionism.
"The heavily abstracted threat of a trade war is unlikely to shake investor confidence until the reality arrives," Schamotta said.
The dollar pared some gains after data showed U.S. economic growth slowed more than expected to 1.9 percent in the fourth quarter due to weak exports. American currencies strengthened after the U.S. GDP data damped expectations of a fast rate-hiking cycle in the coming months. Mexican peso MXN= , which slumped on Thursday after the White House said Trump wants a 20 percent tax on imports from Mexico to pay for a wall on their shared border, strengthened around 1 percent.
The dollar was up 0.51 percent against the yen to 115.1 JPY= and was up 0.2 percent to 100.58 against a basket of six major currencies .DXY .
On Wall Street, stocks were slightly lower at the open as investors took a breather following the Dow Jones Industrial Average's three-day winning streak spurred by pro-growth optimism and rosy corporate earnings. market has had a strong, solid rally and there's a pause to evaluate and react to the next set of data and other catalysts that could move the market," said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.
The Dow Jones Industrial Average .DJI fell 12.68 points, or 0.06 percent, to 20,088.23, the S&P 500 .SPX lost 2.52 points, or 0.11 percent, to 2,294.16 and the Nasdaq Composite .IXIC dropped 1.30 points, or 0.02 percent, to 5,653.88.
The weakness on Wall Street weighed on MSCI's world index .MIWD00000PUS , which tracks shares in 46 countries. The index was down 0.12 percent.
European shares eased with UBS UBSG.S dragging bank stocks lower after posting a drop in full-year profit, while Britain's biggest supermarket Tesco (LON:TSCO) surged after a 3.7 billion-pound takeover of a supplier.
The pan-European STOXX 600 .STOXX index was down 0.4 percent at 366.04.
In bond markets, U.S. Treasury yields fell as investors reached for U.S. government debt following the disappointing fourth-quarter GDP data.
Benchmark 10-year Treasury yield US10YT=RR was down 1 basis point at 2.495 percent, retreating further from a four-week high reached on Thursday.
Oil prices slipped, giving up gains from earlier in the day, as the market shifted its focus towards production increases in the United States and away from efforts by OPEC and other producers to support prices by cutting supplies.
Brent crude LCOc1 was down 1.14 percent at $55.6 a barrel, while U.S. crude CLc1 was down 0.91 percent at $53.29.
Gold fell and was on track for its first weekly loss of the year as persistent dollar strength prompted some traders to cash in on this week's rally to two-month highs. On Friday, spot gold XAU= was little changed at $1,188.4.
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http://reut.rs/1WAiOSC Global currencies vs. dollar
http://tmsnrt.rs/2egbfVh Global bonds dashboard
http://tmsnrt.rs/2fPTds0 Emerging markets in 2017
http://tmsnrt.rs/2ihRugV
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