* U.S. stocks dip, but financials gain
* Yellen warns about delaying rate hike
* Dollar reverses course in wake of Yellen comments
(Updates with U.S. market open; changes dateline; previous
By Chuck Mikolajczak
NEW YORK, Feb 14 A gauge of global equity
markets dipped on Tuesday and the dollar strengthened as U.S.
Federal Reserve Chair Janet Yellen struck a hawkish tone on the
timing of an interest rate hike.
Yellen said in prepared remarks before the U.S. Senate
Banking Committee that the central bank will likely need to
raise interest rates at an upcoming meeting, although she
expressed caution about the considerable economic policy
uncertainty under the Trump administration.
On Wall Street, financial stocks moved higher
following her remarks and were last up 0.5 percent. Utilities
and real estate, which tend to weaken in a
rising rate environment, extended declines and were last down
0.9 percent and 1.1 percent, respectively.
The Fed signaled in December that it expected to raise rates
three times in 2017.
The dollar reversed course after Yellen's comments and was
last up 0.3 percent after touching a three-week high of 101.31
against a basket of major currencies.
"The tone is overall more hawkish than what the market had
expected. The market seems to be under-pricing an upcoming rate
hike," said Omer Esiner, chief market strategist at Commonwealth
Foreign Exchange Inc. in Washington.
"This doesn't mean they will move in March, but the Fed
wants to have the option to move."
Thomson Reuters data shows traders see a 17.7 percent chance
of a 25-basis-point hike in rates at the Fed's March meeting.
The greenback was initially under pressure following the
resignation of President Donald Trump's national security
adviser, Michael Flynn, who quit over revelations he had
discussed U.S. sanctions against Moscow with the Russian
ambassador to the United States before Trump took office.
Yellen's hawkish tone dovetailed with recent comments from
other Fed officials.
Dallas Fed President Robert Kaplan on Monday argued the Fed
should move soon to avoid falling behind the curve, especially
as fiscal policy could drive faster growth and inflation.
Earlier on Tuesday, Richmond Fed President Jeffrey Lacker said
the central bank will likely have to raise interest rates more
rapidly than financial markets currently expect.
The Dow Jones Industrial Average was up 3.29 points,
or 0.02 percent, to 20,415.45, the S&P 500 lost 3.07
points, or 0.13 percent, to 2,325.18 and the Nasdaq Composite
dropped 7.85 points, or 0.14 percent, to 5,756.11.
MSCI's all-country world index lost 0.33
percent, putting it on track for its first decline in five
session. Europe's broad FTSEurofirst 300 index shed
0.05 percent to put a five-session winning streak in jeopardy.
Yields on benchmark U.S. 10-year Treasury notes jumped to
2.5004 percent, down 18/32 in price, after hitting a high of
Gold weakened in the wake of the Yellen comments as
the greenback strengthened and was last down 0.1 percent to
$1,223.90 an ounce.
Oil recouped some ground on OPEC-led efforts to cut output,
though rising production elsewhere kept prices in a narrow range
that has contained them so far this year. Brent crude
was last up 1.1 percent at $56.22 and U.S. crude was 0.9 percent
at $53.42 a barrel.
(Additional reporting by Richard Leong; Editing by Dan Grebler)