* Wall St lower as strong data raises chances of rate hike
* U.S. oil futures hit 7-month high
* Dollar slips vs basket of currencies
(Updates prices, changes comment)
By Rodrigo Campos
NEW YORK, May 17 (Reuters) - Stocks fell on Wall Street on
Tuesday after strong U.S. inflation data increased the
probability of a rate hike from the Federal Reserve, while a
global gauge of stocks ticked lower.
The U.S. dollar lost ground against a basket of currencies.
Crude oil futures were volatile, with Brent prices matching the
six-month highs hit Monday. U.S. crude touched its highest in
seven months.
U.S. consumer prices recorded their biggest increase in more
than three years in April, pointing to a steady inflation
build-up.
The data "could make Fed officials more confident that
they'll hit their inflation target. A more confident Fed is a
Fed that is more likely to hike again this (northern) summer or
fall," said Brian Jacobsen, chief portfolio strategist at Wells
Fargo Funds Management in Menomonee Falls, Wisconsin.
Other U.S. data on Tuesday showed housing starts rose more
than expected last month, suggesting the economy was regaining
steam early in the second quarter.
Traders now see the probability of a rate hike after the
Fed's November meeting as a toss-up at 51 percent, up from
roughly 42 percent on Monday, according to the CME FedWatch
tool.
At a joint appearance in Washington, Atlanta Fed President
Dennis Lockhart and San Francisco Fed President John Williams
agreed that two to three rate hikes in the remainder of this
year is reasonable.
On Wall Street, stocks were led lower by the more defensive,
high-dividend paying sectors, which tend to be sold when more
investors expect higher rates.
The Dow Jones industrial average .DJI fell 91.26 points,
or 0.52 percent, to 17,619.45, the S&P 500 .SPX lost 9.78
points, or 0.47 percent, to 2,056.88 and the Nasdaq Composite
.IXIC dropped 26.08 points, or 0.55 percent, to 4,749.38.
The pan-European FTSEurofirst 300 share index .FTEU3 ended
down 0.03 percent, while MSCI's gauge of stocks across the globe
.MIWD00000PUS was down 0.09 percent.
In the currency market, the British pound rose as much as
0.9 percent to $1.4524 GBP= , helped in part by a report that
the "In" campaign held a 15-point lead over rival "Out" ahead of
Britain's June 23 referendum on European Union membership.
The dollar index fell for a second consecutive day as
traders doubted the U.S. inflation data was enough to push the
Fed closer to tightening policy. The yen JPY= was up 0.06
percent versus the greenback at 109.08 per dollar and the euro
EUR= rose 0.05 percent to $1.1322.
"If you are a hawk, you could see the CPI as being higher.
But in reality, the numbers were pretty much on consensus," said
Richard Scalone, co-head of foreign exchange at TJM Brokerage in
Chicago, in reference to Fed policymakers considered "hawks" for
favoring tighter monetary policy.
Yields for two-year Treasury notes US2YT=RR rose as high
as 0.819 percent on the strong inflation data, their highest
since April 28. Three-year notes US3YT=RR also hit their
highest since then, touching 0.979 percent.
Benchmark 10-year notes US10YT=RR rose 1/32 in price to
yield 1.7534 percent, down from 1.753 percent on Monday.
U.S. crude prices hit seven-month highs on expectations of
lower U.S. stockpiles. U.S. crude CLc1 touched $48.42, the
highest since mid October, and was recently up 0.5 percent at
$47.97.
Brent crude LCOc1 hit $49.58 per barrel, a six-month high,
and last traded at $49.01, up 0.1 percent on the day.
Copper CMCU3 ticked up 0.1 percent to $4,652 per tonne.
Spot gold XAU= was up 0.2 percent at $1,276.56 an ounce.