• U.S. stocks down in late morning trading
  • Dollar edges higher vs euro
  • Oil prices down sharply

NEW YORK, June 20 (Reuters) - Global stock indexes fell and the dollar inched up against the euro on Tuesday as investors weighed the U.S. interest rate outlook following news that housing starts rose.

U.S. Treasury yields traded lower in a narrow range.

Investors also were digesting China's move to cut its benchmark loan prime rates (LPR) for the first time in 10 months on Tuesday. Among Beijing's moves to stimulate the country's slowing recovery, the People's Bank of China lowered the medium-term lending facility rate on Thursday.

Groundbreaking on U.S. single-family homebuilding projects surged in May by the most in more than three decades and permits for future construction also rose, the report showed.

After lifting rates by 5 percentage points since March 2022, the Federal Reserve this month took a breather to assess the effects of its actions. Rate hikes could resume next month, however, with inflation still too high.

The Dow Jones Industrial Average led declines among the major U.S. stock indexes at midday, and all of the 11 major S&P 500 sectors were lower.

The Dow (.DJI) fell 306.37 points, or 0.89%, to 33,992.75 ; the S&P 500 (.SPX) lost 33.82 points, or 0.77%, at 4,375.77 ; and the Nasdaq Composite (.IXIC) dropped 96.68 points, or 0.71%, to 13,592.89 .

U.S. markets were closed for a public holiday on Monday.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 11, 2023. REUTERS/Brendan McDermid

The pan-European STOXX 600 index (.STOXX) lost 0.51 % and MSCI's gauge of stocks across the globe (.MIWD00000PUS) shed 0.75 %.

Against a basket of six major currencies, the dollar was up 0.22% on the day, with the euro down 0.14% to $ 1.0907 .

Investors were also anxious to hear from Fed Chair Jerome Powell, who is due to testify before the U.S. House of Representatives' Financial Affairs Committee on Wednesday.

"If Mr. Powell remains adamant that the central bank is not done raising interest rates to crush inflation, that could help the dollar stabilize after the big declines we saw last week," said Joe Manimbo, senior market analyst at Convera.

The Australian dollar fell after its latest central bank meeting minutes showed that keeping interest rates unchanged had been under consideration.

In Treasuries, the yield on 10-year notes was down 6 basis points (bps) at 3.709%.

Oil prices fell sharply following a mixed demand outlook from China.

U.S. crude recently fell 1.81% to $ 70.48 per barrel and Brent was at $ 75.32 , down 1.01% on the day.

Spot gold dropped 0.7 % to $ 1,935.79 an ounce.

Reporting by Caroline Valetkevitch; additional reporting by Saqib Iqbal Ahmed in New York, Joice Alves in London, Selena Li in Hong Kong and Anisha Sircar in Bengaluru; editing by Susan Fenton, Jason Neely and Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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