GLOBAL MARKETS-Shares slip after China data, ahead of Fed minutes

(Updates prices at 1126 ET/ 1526 GMT, adds commentary)

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Euro STOXX 600 down 0.79%, U.S. stock indexes dip

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Treasury yields, U.S. dollar up modestly

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Graphic: World FX rates http://tmsnrt.rs/2egbfVh

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Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn

By Sinéad Carew and Tom Wilson

NEW YORK/LONDON July 5 (Reuters) -

MSCI'S global equities index was lower on Wednesday with investors waiting for the U.S. Federal Reserve meeting minutes, economic data and the upcoming earnings season for clues on the economy's heath and the interest rate outlook.

Putting a damper on equities overseas earlier was the release of survey showing China's services sector - which had rebounded since the lifting of COVID-19 lockdowns - expanding in June at the softest pace in five months, adding to signs of a faltering recovery in the world's second-biggest economy.

Longer-dated U.S. Treasury yields were modestly higher after a softer-than-expected reading on U.S. made goods and ahead of the release of minutes from the Federal Reserve's last policy meeting in June.

Investors returned from Tuesday's U.S. Independence Day holiday with the release of the minutes of the Fed's last policy meeting on their agenda for later on Wednesday, and the non-farm payrolls report due out on Friday.

While the Fed is widely expected to hike rates again in July investors will look to upcoming data such as inflation readings and the second-quarter corporate earnings season for clues on the Fed's plans for rates later this year.

"There's a lot of data we're going to see here over the next several weeks as we head to the end of July Fed meeting. Today that means the likelihood of a flat market, especially given that its a holiday week," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

Data also showed contracting euro zone business activity. France's dominant services sector shrank last month for the first time since January.

The Dow Jones Industrial Average fell 58.31 points, or 0.17%, to 34,360.16, the S&P 500 lost 5.12 points, or 0.11%, to 4,450.47 and the Nasdaq Composite dropped 23.69 points, or 0.17%, to 13,793.08.

The pan-European STOXX 600 index lost 0.78% and MSCI's gauge of stocks across the globe shed 0.39%.

Emerging market stocks lost 0.76%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.84% lower, while Japan's Nikkei lost 0.25%.

Traders are betting on an 88.7% chance the Fed will hike rates by a quarter percentage point in July after pausing last month, but have only priced in a 17.7% chance that it would need to deliver another hike in September, according to CME Group's FedWatch tool.

The U.S. dollar was holding steady against other major currencies as traders awaited the Fed minutes.

The dollar index rose 0.097%, with the euro down 0.04% to $1.0873. The Japanese yen weakened 0.04% versus the greenback at 144.49 per dollar, while Sterling was last trading at $1.2716, up 0.03% on the day.

In Treasuries, benchmark 10-year notes were up 4.2 basis points to 3.900%, from 3.858% late on Monday. The 30-year bond was last up 3.7 basis points to yield 3.9138%, from 3.877%. The 2-year note was last was down 2.1 basis points to yield 4.9194%, from 4.94%.

In energy markets, Brent crude

oil prices

were up slightly as supply cuts announced this week by top crude exporters Saudi Arabia and Russia countered concern over the global economy.

With no settlement on Tuesday for U.S. crude because of the holiday, trade on Wednesday appeared to narrow the spread, with WTI catching up with Brent's Tuesday gains.

U.S. crude recently rose 2.78% to $71.73 per barrel and Brent was at $76.48, up 0.3% on the day.

(Reporting by Sinéad Carew in New York, Tom Wilson in London and Stella Qiu in Sydney Additional reporting by Dhara Ranasinghe Editing by Sam Holmes, Helen Popper and Christina Fincher)