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(Updates to afternoon U.S. trading)
* 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 underwhelm
* Oil prices fall as focus shifts to U.S. output
By Saqib Iqbal Ahmed
NEW YORK, Jan 27 (Reuters) - A key index of global equitymarkets slipped from near record highs on Friday afterunderwhelming corporate earnings and U.S. economic growth datagave investors reason to pause following the recent sharp rallyin equity prices.
The dollar shrugged off disappointing U.S. fourth-quartergross domestic product numbers to extend its rally against abasket of currencies, and U.S. Treasury debt yields slipped asthe data spurred buying of U.S. government debt.
MSCI's world index, which tracks shares in46 countries, was down 0.12 and about 2 percent off its recordhigh hit in April 2015. Weakness in Europe weighed on the indexand it found little support on Wall Street.
Lackluster corporate results gave little reason to investorsto push U.S. stocks higher.
Chevron fell 2.5 percent to $113.67 after itsquarterly profit fell short of analysts' expectations. The stockwas the biggest drag on the S&P 500 and the Dow Jones IndustrialAverage indexes.
"Earnings have really just been fine," said David Lyon,global investment specialist at J.P. Morgan Private Bank in SanFrancisco.
"They haven't been too hot, nor have there been any concernsor cautionary flags raised. I think 'fine' might not be enoughin the near-term, and there is a growing concern that while thenumbers have been good, the forward guidance have been justokay."
The Dow Jones Industrial Average fell 18.91 points,or 0.09 percent, to 20,082, the S&P 500 lost 3.62 points,or 0.16 percent, to 2,293.06 and the Nasdaq Composite added 0.07 points, or 0 percent, to 5,655.24.
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 closed down 0.4percent at 366.04.
The greenback, which has climbed for two straight days froma seven-week low against a basket of major currencies, wasbuoyed by hopes that U.S. President Donald Trump's pro-growthpolicies will further bolster the U.S. economy.
Increasing expectations of tax reforms and fiscal stimulus,which support the dollar, are temporarily soothing concernsabout Trump's stance on trade protectionism, said KarlSchamotta, director of global product & market strategy atCambridge Global Payments in Toronto.
The dollar retreated a little against a basket of currenciesafter data showed U.S. economic growth slowed more than expectedto 1.9 percent in the fourth quarter but recouped losses totrade up 0.19 at 100.57.
The greenback rose to a one-week high of 115.37 against theyen.
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, strengthenedmore than 1 percent after the two countries agreed not to talkpublicly for now about payment for the wall.
In bond markets, U.S. Treasury yields fell as investorsreached for U.S. government debt following the disappointingfourth-quarter GDP data.
The benchmark 10-year Treasury yield was down 2basis points at 2.486 percent.
Oil prices extended losses after data suggested drilling isramping up in the United States, easing the focus on efforts byOPEC and other producers to support prices by cutting supplies.
Brent crude was down 1.64 percent at $55.32 abarrel, while U.S. crude was down 1.56 percent at $52.94.
Gold was on track for its first weekly loss of the year aspersistent dollar strength prompted some traders to cash in onthis week's rally to two-month highs. On Friday, spot gold was little changed at $1,189.81.
(Additional reporting by Gertrude Chavez-Dreyfuss in New Yorkand Tanya Agrawal in Bengaluru; Editing by Bernadette Baum andNick Zieminski)