June 14, 2017 / 4:01 PM / a year ago

GLOBAL-MARKETS-Oil tumbles, stocks follow; U.S. dollar off after weak data

(Recasts throughout, changes dateline from previous LONDON)

* Fed hike almost certain, all eyes on signals for further policy

* Gasoline buildup takes down crude prices

* Treasury yields slide after soft retail, inflation data

By Rodrigo Campos

NEW YORK, June 14 (Reuters) - Oil prices tumbled on Wednesday after an unexpectedly large buildup in gasoline stockpiles and the U.S. dollar fell after weak data made investors question the current path of interest rate increases from the Federal Reserve.

Energy stocks led Wall Street lower, while Treasury yields fell.

Oil prices fell to their lowest in over five weeks following the U.S. gasoline data and International Energy Agency (IEA) data projecting an increase in non-OPEC production.

“Oil futures are being dragged down by gasoline futures. The industry continues to turn a crude oil surplus into a gasoline and distillate product surplus,” Andrew Lipow, president of Lipow Oil Associates in Houston said.

U.S. crude fell 3.57 percent to $44.80 per barrel and Brent was last at $47.01, down 3.51 percent on the day.

The dollar index touched its lowest since Nov. 9 as the biggest drop in retail sales in 16 months and retreating inflation pressures were seen affecting monetary policymakers’ view that the economic soft patch was transitory.

“The numbers cast serious, serious doubt on whether there will be another hike this year,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

The widely expected quarter-point interest rate hike after the current Fed meeting wraps up later on Wednesday will take the Fed funds target rate above 1 percent for the first time since the immediate aftermath of the collapse of Lehman Brothers in 2008.

The dollar index fell 0.54 percent, with the euro up 0.55 percent to $1.1276.

The Japanese yen strengthened 0.83 percent versus the greenback at 109.18 per dollar, while Sterling was last trading at $1.2806, up 0.44 percent on the day.

U.S. interest rates futures rose after the weak data, suggesting traders reduced their bets on a possible third Fed interest rate increase in 2017.

“We think this effectively takes September off the table,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York, in reference to the impact of the data on the probability of a September Fed rate increase.

Benchmark 10-year notes last rose 27/32 in price to yield 2.1151 percent, from 2.207 percent late on Tuesday.

Energy sector shares tracked the slide in crude prices and weighed on the S&P 500, which had been trading higher earlier in the session.

The Dow Jones Industrial Average rose 9.06 points, or 0.04 percent, to 21,337.53, the S&P 500 lost 2.38 points, or 0.10 percent, to 2,437.97 and the Nasdaq Composite added 7.87 points, or 0.13 percent, to 6,228.24.

The pan-European FTSEurofirst 300 index lost 0.18 percent and MSCI’s gauge of stocks across the globe gained 0.18 percent.

Emerging market stocks rose 0.63 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.73 percent higher.

Gold rose after the weaker-than-expected U.S. data knocked the dollar.

Spot gold added 0.9 percent to $1,276.44 an ounce. U.S. gold futures gained 0.78 percent to $1,278.50 an ounce.

Copper lost 0.30 percent to $5,700.00 a tonne.

Reporting by Rodrigo Campos, additional reporting by Dion Rabouin, Sam Forgione and Scott DiSavino; Editing by Nick Zieminski

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