By Sinead Carew
NEW YORK (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.
The 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.
"We’ve 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 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 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.
The dollar index <.DXY>, which measures the greenback against a basket of six major currencies, was up 0.3 percent, at seven-week highs.
The 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.
The 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.
(Additional reporting by Karen Brettell and Samuel Forgione in New York, Nigel Stephenson, John Geddie, Dhara Ranasinghe and Christopher Johnson in London, Hideyuki Sano in Tokyo; Editing by Hugh Lawson and Nick Zieminski)