* Euro at 6-week high vs dollar * Global equity markets trade lower * Investors cautious as Fed policymakers talk tapering By Herbert Lash NEW YORK, Dec 10 Global equity markets traded slightly lower on Tuesday while the dollar and U.S. Treasury yields eased on a growing view that the Federal Reserve will need additional positive data before it decides to scale back its economic stimulus. The euro hit a six-week high against the dollar as traders reconsidered whether the Fed would trim its monthly purchases of $85 billion in bonds at its two-day meeting of policy-makers next week. Even if the Fed were to signal a pullback in bond purchases, policymakers will likely opt for a small one to prevent a bond market sell-off, which would send long-term interest rates higher and hurt the U.S. housing market. "We might see a gradual tapering. The Fed won't let rates go much higher," said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York. At the same time, increased speculation that a banking union with the power to close failing banks will be created in the euro zone before the end of 2014 lifted the euro. European Union finance ministers meeting in Brussels are likely to take a step toward creating a banking union on Tuesday, but leave nagging legal details to another time, perhaps next week. A banking union is widely viewed as crucial to shore up the euro zone against future debt and financial crises. "There's some expectation that a deal may be reached before year-end, and that is supportive of the euro," said Sireen Harajli, currency strategist at Mizuho Bank Ltd. in New York. The euro gained for a sixth straight day versus the greenback and was within sight of this year's high of $1.3832. It last traded down 0.25 percent 1.3772. The euro's rise caused the dollar index to extend losses into a second straight day. It fell to six-week lows, dragged down by lower U.S. Treasury yields, as investors mostly downplay the prospect of a reduction in the Fed's asset purchases this month. The dollar index was down 0.21 percent at 79.965 The 10-year Treasury note was 12/32 higher in price to yield 2.8134 percent. European shares slipped, weighed down by major Swiss stocks as a rally in the Swiss franc raised fresh concern about the country's exports. The pan-European FTSEurofirst 300 index closed down by 0.56 percent at a provisional 1,265.365. The Dow Jones industrial average fell 44.39 points, or 0.28 percent, at 15,981.14. The Standard & Poor's 500 Index was down 4.92 points, or 0.27 percent, at 1,803.45. The Nasdaq Composite Index was down 7.18 points, or 0.18 percent, at 4,061.57. Brent crude for January was down 59 cents at $108.80 a barrel. Brent dropped 2 percent on Monday, its biggest loss in five weeks. But U.S. crude oil was higher on news of progress toward the opening of a major pipeline that will transport oil from the U.S. Midwest to the Gulf, helping drain surplus crude at the pricing point for the futures contract. U.S. light crude futures for January were up 71 cents at $98.05 a barrel.