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(Updates to U.S. market open, adds details, changes dateline,previous LONDON)
* Wall St stocks edge lower; U.S. Q4 GDP disappoints
* Dollar up for second day, U.S. bond yields fall
* European shares dip on banks, UBS results underwhelms
* Oil prices fall as focus shifts to U.S. output
By Saqib Iqbal Ahmed
NEW YORK, Jan 27 (Reuters) - The U.S. dollar rose to aone-week high against the yen on Friday on hopes U.S. PresidentDonald Trump's pro-growth policies will further bolster theeconomy, and a key index of global equity markets slipped asinvestors paused after a recent rally.
U.S. Treasury debt yields slipped as data showingdisappointing U.S. economic growth in the fourth quarter spurredbuying of U.S. government debt, while oil prices retreated asinvestors focused on production increases in the United States.
The greenback has climbed for two straight days, pulling itback from seven-week lows against a basket of major currencies,on the view it would gain from a rise in border tariffs, taxreform and future spending.
Karl Schamotta, director of global product & market strategyat Cambridge Global Payments in Toronto, said increasingexpectations of tax reforms and fiscal stimulus, which supportthe dollar, are temporarily soothing concerns about Trump'sstance on trade protectionism.
"The heavily abstracted threat of a trade war is unlikely toshake investor confidence until the reality arrives," Schamottasaid.
The dollar pared some gains after data showed U.S. economicgrowth slowed more than expected to 1.9 percent in the fourthquarter due to weak exports.
Latin American currencies strengthened after the U.S. GDPdata damped expectations of a fast rate-hiking cycle in thecoming months.
The Mexican peso, which slumped on Thursday after theWhite House said Trump wants a 20 percent tax on imports fromMexico to pay for a wall on their shared border, strengthenedaround 1 percent.
The dollar was up 0.51 percent against the yen to 115.1 and was up 0.2 percent to 100.58 against a basket of sixmajor currencies.
On Wall Street, stocks were slightly lower at the open asinvestors took a breather following the Dow Jones IndustrialAverage's three-day winning streak spurred by pro-growthoptimism and rosy corporate earnings.
"The market has had a strong, solid rally and there's apause to evaluate and react to the next set of data and othercatalysts that could move the market," said Andre Bakhos,managing director at Janlyn Capital in Bernardsville, NewJersey.
The Dow Jones Industrial Average fell 12.68 points,or 0.06 percent, to 20,088.23, the S&P 500 lost 2.52points, or 0.11 percent, to 2,294.16 and the Nasdaq Composite dropped 1.30 points, or 0.02 percent, to 5,653.88.
The weakness on Wall Street weighed on MSCI's world index, which tracks shares in 46 countries. The indexwas down 0.12 percent.
European shares eased with UBS dragging bank stockslower after posting a drop in full-year profit, while Britain'sbiggest supermarket Tesco surged after a 3.7 billion-poundtakeover of a supplier.
The pan-European STOXX 600 index was down 0.4percent at 366.04.
In bond markets, U.S. Treasury yields fell as investorsreached for U.S. government debt following the disappointingfourth-quarter GDP data.
Benchmark 10-year Treasury yield was down 1basis point at 2.495 percent, retreating further from afour-week high reached on Thursday.
Oil prices slipped, giving up gains from earlier in the day,as the market shifted its focus towards production increases inthe United States and away from efforts by OPEC and otherproducers to support prices by cutting supplies.
Brent crude was down 1.14 percent at $55.6 a barrel,while U.S. crude was down 0.91 percent at $53.29.
Gold fell and was on track for its first weekly loss of theyear as persistent dollar strength prompted some traders to cashin on this week's rally to two-month highs. On Friday, spot gold was little changed at $1,188.4.
(Additional reporting by Gertrude Chavez-Dreyfuss in New Yorkand Tanya Agrawal in Bengaluru; Editing by Bernadette Baum)