* European stocks extend Wednesday's gains, Japan closes up
* Dollar index up, gains vs yen and euro
* Oil falls for third day; copper and gold down (Updates after U.S. open, changes byline, previous dateline LONDON)
By Sinead Carew
NEW YORK, March 2 (Reuters) - Wall Street fell as investors took a breather on Thursday after a record day, while the dollar strengthened on positive U.S. data and growing expectations the Federal Reserve will raise interest rates this month.
Federal Reserve Governor Lael Brainard said late on Wednesday that an improving global economy and a solid U.S. recovery meant it would be "appropriate soon" to raise rates. comments followed hawkish statements from two central bankers earlier in the week. Fed Chair Janet Yellen is due to speak on the economic outlook in Chicago on Friday.
On top of this, data showed the number of Americans filing for unemployment benefits fell to near a 44-year-low last week, pointing to further tightening of the labor market. had this great run of data in the U.S. and the expectation on a March rate move has gone up," Steven Englander, global head of foreign exchange strategy at Citigroup (NYSE:C) in New York.
Federal fund futures prices suggest markets now see a 75-percent chance of a 25 basis point hike in March up from 66 percent on Wednesday and from 35 percent on Tuesday, according to CME Group's (NASDAQ:CME) FedWatch tool.
At 10:38 a.m. ET, the Dow Jones Industrial Average .DJI was down 17.21 points, or 0.08 percent, to 21,098.34, the S&P 500 .SPX had lost 6.98 points, or 0.29 percent, to 2,388.98 and the Nasdaq Composite .IXIC had dropped 19.73 points, or 0.33 percent, to 5,884.30.
The FTSEurofirst 300 .FTEU3 index rose 0.12 percent but MSCI's global stocks index .MIWD00000PUS was down 0.2 percent after touching another intraday record high.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.05 percent, while Japan's Nikkei .N225 closed up 0.9 percent, after hitting a 14-month high, as a weaker yen helped exporters. dollar index .DXY , which measures the greenback against a basket of six major currencies, was up 0.3 percent, at seven-week highs. dollar has strengthened even as many analysts see limited further gains for the currency due to worries about the impact of higher rates and a stronger dollar on global growth.
The greenback was last up 0.64 percent against the Japanese yen JPY= at 114.43, the highest since Feb. 15, while the euro fell 0.3 percent to $1.0516 EUR= .
In fixed income markets, U.S. Treasury yields pushed higher on the prospect of higher rates. U.S. 2-year yields extended their climb and hit their highest since Aug 2009 of 1.32 percent while 3-year yield hit a nearly 11-week high of 1.598 percent. The 10-yr yield hit a 2-week high of 2.49 percent.
Oil prices fell for a third consecutive day after a record build-up in U.S. crude inventories and data showing Russian oil production was unchanged last month. Brent crude LCOc1 fell 1.6 percent to $55.46 a barrel while U.S. crude was down 1.6 percent at $52.97. dollar put metals prices under pressure. Copper CMCU3 fell 1.3 percent to $5,941 a tonne while gold XAU= fell 0.6 percent to $1,240.66 an ounce. World FX rates in 2017
http://tmsnrt.rs/2egbfVh Global assets in 2017
http://reut.rs/1WAiOSC Global currencies vs. dollar
http://tmsnrt.rs/2egbfVh Global bonds dashboard
http://tmsnrt.rs/2fPTds0
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