* Investors focused on whether Fed to turn more hawkish
* Oil tops $114 a barrel on Iraq concerns
(Adds Wall Street downturn; updates dollar, Treasury and oil
By Michael Connor
NEW YORK, June 18 The dollar dipped and Wall
Street equities softened on Wednesday as global markets puzzled
over the odds that Federal Reserve Chair Janet Yellen will soon
strike a more hawkish tone on monetary policy.
Prices of U.S. Treasuries recouped Tuesday's losses. U.S.
data on Tuesday showing inflation running at an unexpectedly
high 2 percent a year stirred expectations that the Fed would be
open to raising interest rates sooner than some had thought.
The Fed's policy-setting panel, the Federal Open Market
Committee, is due to issue its policy statement at 2 p.m on
Wednesday, at the close of a two-day meeting, followed a half
hour later by a news conference by Yellen.
"We are seeing a lot of caution ahead of the FOMC," said
Sireen Harajli, currency strategist at Mizuho Corporate Bank in
New York. "We see some modest pressure on the dollar."
The dollar index, which gauges the greenback against the
euro, Japanese yen and four other currencies, dipped 0.09
percent to 80.554.
U.S. stocks eased modestly after a three-day winning streak
for the S&P 500 index.
The Dow Jones industrial average fell 33.75 points,
or 0.2 percent, to 16,774.74, the S&P 500 lost 0.78
points, or 0.04 percent, to 1,941.21, and the Nasdaq Composite
dropped 6.11 points, or 0.14 percent, to 4,331.12.
Adobe Systems jumped 7 percent to $72.42 after the
maker of Photoshop and Acrobat software late on Tuesday reported
better-than-expected quarterly profit and revenue.
Trading in Treasuries also focused on Fed policy. Prices
rose after the Bank of England released minutes from its policy
meeting that were less hawkish than expected.
Investors have been more wary of central banks becoming more
hawkish since Bank of England Governor Mark Carney surprised
markets last Thursday by saying Britain could become the first
major economy to tighten monetary policy since the 2008
"The minutes were less hawkish than what Carney said last
week," said Tom Tucci, head of Treasuries trading at CIBC in New
Short covering also aided prices, Jason Rogan, managing
director at Guggenheim Securities in New York, said.
Benchmark 10-year notes rose 6/32 in price to
yield 2.63 percent, down from 2.65 percent late on Monday.
Intermediate-dated debt also outperformed, with five-year notes
gaining 5/32 in price to yield 1.72 percent, down from 1.75
The risk of a faster U.S. policy tightening was enough to
keep European stocks from hitting new multi-year highs. The
FTSEurofirst 300 index of top European shares was off
0.02 percent at 1,387.44.
In other markets, Brent crude oil rose 69 cents and
topped $114 per barrel at $114.13 as a strike by Sunni militants
on a key refinery near Baghdad stoked worries about oil exports
from key producer Iraq.
(Editing by Chizu Nomiyama and Leslie Adler)