* Dollar recovers ground after five straight daily declines
* Europe-wide index and Wall Street stocks flat
* Oil falls, U.S. Treasury yields rise (Updates to U.S. market open, changes byline, previous dateline London)
By Sinead Carew
NEW YORK, Jan 18 (Reuters) - U.S. dollar recovered some ground on Wednesday while stocks posted modest losses, with investors still voicing caution over how U.S. policy will develop under Donald Trump's presidency days ahead of his inauguration.
Energy stocks fell along with oil futures and U.S. Treasury yields rose on higher inflation ahead of a speech by U.S. Federal Reserve chair Janet Yellen.
While Wall Street has been betting on Trump's promises of lower taxes, lighter regulation and fiscal spending, some investors hit the pause button before he officially takes office on Friday as he has yet to unveil clear policy plans.
"There is a lot of uncertainty hovering over the market, regarding what policies will be implemented," said Quincy Krosby, market strategist at Prudential Financial.
At 10:54 a.m. ET, the Dow Jones Industrial Average was down 24.29 points, or 0.12 percent, to 19,802.48, the S&P 500 had lost 0.67 points, or 0.029543 percent, to 2,267.22 and the Nasdaq Composite had added 1.99 points, or 0.04 percent, to 5,540.71.
Europe's FTSEurofirst 300 index of major companies was flat after a choppy session, while banking shares came under pressure as investors chewed over details of regulatory fines on Deutsche Bank.
Investors were also waiting for more fourth-quarter earnings reports before making more bets according to Andy Sullivan, portfolio manager with GL Asset Management UK in London.
"The last few days have been choppier, and for the rally to be sustained, we need to see earnings growth start to come through," Sullivan said.
The U.S. was up 0.3 percent against a basket of major currencies after hitting a nearly six-week low the previous day after Trump complained that dollar strength as hurting trade relations with China.
"We went a bit far on dollar weakness yesterday, so it's natural to have a correction once in a while (but) the downward trend is intact," said UBS currency strategist Daniel Trum in Zurich.
"Markets are finally becoming aware of the potential negative effect of Trump's policies on the U.S. dollar - at the beginning we had lots of positive sentiment ... but now we see that the focus is shifting more towards potential trade disputes and potential difficulties in Trump implementing his policies."
Benchmark 10-year notes fell 14/32 in price to yield 2.38 percent, up from 2.33 percent late Tuesday. Data showed U.S. consumer prices increased in December as households paid more for gasoline and rental accommodations, leading to the largest year-on-year rise in 2-1/2 years.
Traders in Asia said shares were helped by hopes that the concern about a stronger dollar expressed by the U.S. President-elect at the weekend would benefit emerging markets where companies have borrowed heavily in dollars.
MSCI's ex-Japan Asia-Pacific shares index rose 0.3 percent, and its intraday high was just shy of last Thursday's three-month high.
Safe havens for capital have been in demand but Gold fell slightly from its almost two-month high to $1,215.3 per ounce after seven sessions of gains.
Oil prices fell on expectations U.S. producers would boost output, just as OPEC signaled that a global supply-reduction deal will shrink the oil glut this year. Brent futures fell 1.9 percent to $54.43 per barrel and U.S. crude fell 1.8 percent to $51.53..
Additional reporting by Patrick Graham in London; Editing by Larry King and Nick Zieminski