GLOBAL MARKETS-Bonds rise on weak data; gold in worst week since June
* Retail sales, consumer sentiment data below expectations
* Gold at five-week low as Fed liquidity curbs weigh
* Report on Summers as next Fed chief briefly lifts dollar
* World stocks slip for second day
By David Gaffen and Herbert Lash
NEW YORK, Sept 13 (Reuters) - U.S. Treasury yields fell on Friday after weak U.S. data on retail sales and consumer sentiment, while oil fell and gold was headed for its worst week in two months as concerns eased about a potential strike against Syria.
Most U.S. and European stock indexes rose, though an index for global stocks was flat, as investors looked ahead to next week's key monetary policy meeting of the U.S. Federal Reserve.
Analysts still expect the Fed will begin to reduce its $85 billion a month in bond purchases, a program that has restrained interest rates and boosted the price of risk assets.
Retail sales rose slightly in August. Wholesale prices remained subdued, with the U.S. Labor Department's core producer price index rising just 1.1 percent year-over-year, the slowest rate of increase since June 2010.
The data underscored the lack of inflation pressures in the economy, though economists believe that will not deter the Fed from paring back bond purchases.
"These were the two big numbers, the PPI and retail sales, and I don't think either of them change the outlook, which our base case is the Fed goes in and begins the (tapering) process here on the Sept. 17-18 meeting," said Darrell Cronk, regional chief investment officer at Wells Fargo Private Bank in New York.
Bond prices sold off overnight and the dollar staged a rally on a Japanese report that former Treasury Secretary Lawrence Summers would soon be named to head the Fed.
While traders had doubts about the source of the report in Japan's Nikkei business daily, analysts said its impact highlighted the sensitivity of investors to the possibility of Summers taking over the Fed.
Investors say he might tighten monetary policy more quickly than the other main candidate, Fed Vice Chair Janet Yellen.
Asked about the story, a White House spokeswoman said Obama had not made his decision about the Fed job.
MSCI's measure of global shares rose 0.03 percent, and its emerging markets index fell 0.4 percent.
The Dow Jones industrial average was up 66.86 points, or 0.44 percent, at 15,367.50. The Standard & Poor's 500 Index was up 3.98 points, or 0.24 percent, at 1,687.40. The Nasdaq Composite Index was up 0.04 points, or 0.00 percent, at 3,716.01.
In Europe, the FTSEurofirst 300 index closed up 0.2 percent at a provisional 1,250.26.
Gold was down 5.4 percent for the week, the worst since June, after heavy selling linked to expectations of the Fed rollback and an easing of tensions over Syria. Gold was quoted at $1,313.46 an ounce, down 0.5 percent, and has now declined by about 21 percent this year after 12 consecutive annual gains.
"This is almost certainly the pricing in of the expectations of QE tapering," Mitsubishi analyst Jonathan Butler said.
The dollar was up 0.1 percent against a basket of major currencies while 10-year U.S. Treasury yields fell to 2.8939 percent, up 3/32 in price.
Investors generally expect the Fed to announce a tapering of its monthly bond purchases next week in response to signs of growing strength in the U.S. economy, but the pace of future cutbacks is less clear.
"In the coming months, given that the new Fed chairman starts in January, the Summers effect, if it is announced, could be as dominant" as the Fed's tapering decision, said Mike Gallagher, managing director of IDEAglobal.
Gallagher said the combination of a Fed tapering decision next week and the prospect of Summers becoming chairman could set U.S. Treasury 10-year yields on a course toward 3.5 percent by year's end. Such a move would hit other markets hard, as many expect the benchmark 10-year yield, which moves inversely to the price of the bond, to remain around 3 percent.
A successful Summers nomination is far from certain, and any appointment must be approved by the U.S. Senate.
Brent crude oil fell, on track for its steepest weekly decline since June, as fears receded about an imminent military strike on Syria as Russia and the United States agreed on a new push to negotiate an end to that country's civil war.
Brent was down about 3.5 percent since last Friday. The international benchmark has slid about $5 a barrel since the end of August, when it jumped above $117 amid worries that a possible U.S. attack on Syria could lead to more violence in a region that pumps around a third of the world's oil.
The Brent crude futures contract for October, which expires on Friday, fell 42 cents to $112.21 a barrel by 11:15 a.m., and U.S. crude shed 75 cents to $107.85 a barrel,