By Lewis Krauskopf
NEW YORK (Reuters) - The U.S. dollar slipped on Thursday after a recent rally and world stock markets inched higher as investors digested U.S. economic data and prospects for a U.S. tax reform plan proposed by President Donald Trump.
Trump on Wednesday proposed the biggest U.S. tax overhaul in three decades, calling for tax cuts for most Americans, but prompting criticism that the plan favors business and the rich and could add trillions of dollars to the deficit.
"In the U.S., for stocks at least, it is kind of a hangover from yesterday's tax news, people still trying to digest that," said William Delwiche, investment strategist at Baird in Milwaukee.
"From a bond perspective, it is still this idea that the Fed seems very insistent on looking past any sort of short-term data that we might get between now and December and raising rates," Delwiche said.
Bets that the Federal Reserve will raise rates once more by year-end have firmed this week, following comments from Chair Janet Yellen on Tuesday that the U.S. central bank needs to continue gradual rate hikes despite broad uncertainty about the path of inflation.
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Data on Thursday showed the U.S. economy grew a bit faster than previously estimated in the second quarter, but the momentum probably slowed in the third quarter, with activity curbed temporarily following Hurricanes Harvey and Irma.
On Wall Street, equity indexes were little changed after notching solid gains a day earlier.
The Dow Jones Industrial Average rose 44.93 points, or 0.2 percent, to 22,385.64, the S&P 500 gained 2.72 points, or 0.11 percent, to 2,509.76 and the Nasdaq Composite dropped 3.35 points, or 0.05 percent, to 6,449.91.
The Dow got a boost from McDonald's shares, which rose 2.5 percent after an analyst upgrade.
MSCI's gauge of stocks across the globe gained 0.07 percent. The pan-European FTSEurofirst 300 index rose 0.16 percent.
Emerging market stocks lost 0.55 percent, their sixth straight session of declines.
The dollar edged lower against a basket of currencies, on pace to snap a three-day winning streak, as investors looked to take profit on the greenback's rally this week ahead of the end of the quarter.
The dollar index fell 0.26 percent, with the euro up 0.37 percent to $1.1787.
"We had a big move yesterday. For us to take some of that back makes sense," said Brad Bechtel, managing director FX at Jefferies in New York.
Benchmark 10-year notes last fell 2/32 in price to yield 2.3157 percent, from 2.309 percent late on Wednesday.
Oil prices slipped, backing off from earlier gains spurred by tension around northern Iraq following the Kurdistan region's vote in favor of independence.
U.S. crude fell 1.42 percent to $51.40 per barrel and Brent was last at $56.89, down 1.18 percent on the day.
Spot gold added 0.4 percent to $1,286.40 an ounce.
(Additional reporting by Saqib Iqbal Ahmed in New York, Marc Jones in London; Editing by Bernadette Baum and Nick Zieminski)