* S&P 500 touches new intraday high
* Dollar turns up on rising U.S. bond yields
* Oil at near nine-month highs (Adds New York stock, dollar gains; changes dateline; previousLONDON)
By Michael Connor
U.S. Treasuries' prices softened in early trading followinga weak sale of inflation-linked bonds, and the dollar rose asAmerican bond yields increased.
The Standard & Poor's 500 index of top companies hit a thirdstraight intraday high for its sixth day of gains, on course forits longest winning streak since mid-April.
The Dow Jones industrial average rose 50.02 points,or 0.30 percent, at 16,971.48. The Standard & Poor's 500 Index was up 4.28 points, or 0.22 percent, at 1,963.76. TheNasdaq Composite Index was up 5.47 points, or 0.13percent, at 4,364.80.
"There continues to be this hope that the economy improves,that growth improves. But for the markets, a slow steady growthenvironment is pretty much nirvana," said Tim Ghriskey, chiefinvestment officer of Solaris Group in Bedford Hills, New York.
Buoyed by the billions of dollars the U.S. Federal Reserveis still pumping into the global economy, equity markets tookheart from a sanguine message this week on inflation from Fedchief Janet Yellen.
That effect was still dominant on Friday. All of Europe'smajor exchanges inched up, although the MSCI (NYSE: MSCI - news) index of worldshares dipped 0.04 percent from record highs reached on Thursday.
The pan-European FTSEurofirst 300 index was up 0.15percent and reached a 6 1/2-year high as drugmaker Shire (LSE: SHP.L - news) ralliedon a takeover offer, putting the index on track for a 10thstraight week of gains.
U.S. Treasuries' yields rose in part on follow-through fromThursday's weak sale of 30-year Treasury Inflation-ProtectedSecurities. Traders also repositioned as they adjustedexpectations of when the Fed will begin raising interest rates.
The Fed on Wednesday played down a recent uptick ininflation, which has hurt longer-dated bonds and made the yieldcurve steeper.
"There's the thought that maybe they will let inflation runa little bit higher and not raise rates," said Dan Mulholland,managing director in Treasuries trading at BNY Mellon in NewYork.
Benchmark 10-year notes were last down 3/32 inprice to yield 2.63 percent, up from 2.62 percent late onThursday.
The higher yields helped the dollar, with the dollar index up 0.16 percent at 80.444. That shaved the index's weeklyloss to 0.2 percent.
The dollar was last up 0.2 percent against the yen at 102.12yen, while the euro slipped 0.2 percent to $1.3578.
Brent oil prices dropped 28 cents to $114.78 from ahigh of $115.71 touched on Thursday. U.S. oil added 61cents to $107.04.
"The events unfolding in Iraq will continue to dictate thedirection on the market and support the oil price for the timebeing at a high level," said Barbara Lambrecht, an analyst atCommerzbank (Xetra: CBK100 - news) in Frankfurt. (Reporting by Michael Connor in New York; Editing by DanGrebler)
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