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(In 3rd and 17th paragraphs, corrects to show that Mike Cullinane is with D.A. Davidson, not Raymond James.)
* Gold down most since start of January
* Chinese money market rates ease on central bank injection
* Dollar up on Fed speculation; Turkish lira at record low
By Barani Krishnan
NEW YORK, Jan 21 (Reuters) - U.S. bond prices slipped and the dollar rose on Tuesday on speculation the Federal Reserve will further pare its bond-buying stimulus at next week's policy meeting, while global stocks edged down as U.S. equities fell.
Treasuries yields rose from five-week lows as bond prices fell. Gold prices also fell on the talk of more tapering by the Fed, registering the biggest decline since the start of January.
"The view out there is there's going to be continued tapering on a gradual basis," said Mike Cullinane, head of Treasuries trading with D.A. Davidson in St. Petersburg, Florida.
Some bond market traders attributed the speculation on the Fed to an article in The Wall Street Journal that said the U.S. central bank will likely reduce its monthly purchases of Treasuries and mortgage-backed securities by another $10 billion to $65 billion.
"Another $10 billion in tapering is a logical way to go," Cullinane said.
World stocks fell 0.05 percent.
Dow Chemical jumped 4.9 percent to $45.18. Activist investor and hedge fund manager Daniel Loeb has taken a stake in the company and wants it to spin off its petrochemical arm.
Travelers Cos Inc reported much better-than-expected quarterly results, but its shares fell 2.7 percent to $84.12. Shares of Verizon Communications Inc also fell after the company reported strong quarterly results, losing 2.7 percent to $47.05.
The Dow Jones industrial average fell 115.53 points or 0.7 percent, to 16,343.03, the S&P 500 lost 3.66 points or 0.2 percent, to 1,835.04 and the Nasdaq Composite added 1.031 points or 0.02 percent, to 4,198.613.
European stocks rose to a 5-1/2-year high after a move by China to inject money into financial markets eased concerns about a credit crunch that could hamper growth.
European shares also were boosted as results from Unilever and Remy Contreau SA sparked optimism.
Chinese money market rates fell after the country's central bank injected more than 255 billion yuan ($42 billion) into the financial system, easing concerns that another credit crunch was underway less than a month after a late December squeeze.
The key Euribor lending rate held steady as banks began reducing their reliance on European Central Bank funding as they turn again to the market. The ECB has pledged to intervene should the rise in bank-to-bank lending rates that underpin borrowing costs across the economy become "unwarranted."
The benchmark 10-year U.S. Treasury note was down 1/32 in price, its yield at 2.8286 percent.
The 10-year yield was as high as 2.867 percent overnight after hitting 2.818 percent on Friday, which was its lowest level since Dec. 11, according to Reuters data.
Traders and analysts expect the yield to hold in a range between 2.75 percent to 3.00 percent heading into next week's Fed policy meeting.
"I don't see a lot to shake us out of this range," D.A. Davidson's Cullinane said.
German government bond futures fell 4 ticks.
The euro fell toward Monday's two-month troughs after the ZEW indicator of German economic sentiment for January unexpectedly fell to 61.7 after surging to 62.0 in December.
The dollar was broadly stronger, bouncing to 104.29 yen on the speculation of another Fed stimulus cut. The yen was also under pressure after Japan's central bank began a two-day policy meeting, where it is expected to keep its massive quantitative easing program unchanged.
Turkey's lira plunged to a record low against the dollar after the central bank left interest rates unchanged, defying some market expectations for a rise, given high inflation and the weak currency.
The lira has hit a string of record lows as a government corruption scandal undermines already fragile investor confidence. Turkey's huge current account deficit, which it relies on foreign investment to finance, means its economy is seen as highly vulnerable to the withdrawal of Fed stimulus.
Among commodities, Brent crude oil jumped $1.42 to $107.77 a barrel as the International Energy Agency raised its forecast for global oil demand this year, citing accelerating economic growth.
The spot price of gold slipped 1 percent, its most since the year began, to below $1,241 an ounce. On Monday, it had hit its highest level since mid-December at $1,259.85. (Additional reporting by Carolyn Cohn and Anirban Nag in London; Editing by Leslie Adler)