(In paragraph 9, corrects date and price of when front-month crude was last lower to May 19 instead of May 18)

* IEA: Global oil demand to bounce back in 2010

* Wall Street extends losses weighed by energy

* Dollar, yen rise as investors turn cautious

* U.S. May trade gap narrows to lowest since 1999

NEW YORK, July 9 (Reuters) - U.S. crude oil futures were down sharply on Friday as a worrisome demand forecast from the International Energy Agency, weakening equities and a stronger dollar combined to pressure oil prices.

Global oil demand will rebound 1.7 percent next year, but the demand outlook for this year was "effectively unchanged," -- down 2.9 percent, or 2.5 million bpd compared with last year, the Paris-based International Energy Agency, adviser to 28 industrialized nations, said in its latest monthly forecast. [IEA/M]

Wall Street extended declines on fears that an economic recovery and corporate profits will be anemic after oil major Chevron (CVX.N: Quote, Profile, Research) warned about second-quarter results and as oil futures tumbled. [.N]

The dollar and yen rose against other major currencies on investor caution as the U.S. corporate earnings season began and shares prices fell.