Update prices and commentary

By Naomi Rovnick and Ankur Banerjee

LONDON/SINGAPORE, May 24 (Reuters) -Global stocks slipped on Friday,heading for a weekly loss, after data signalling a rebound in U.S. inflation outweighed a boost to sentiment in the wake of strong earnings from artificial intelligence giant Nvidia.

MSCI's global share index .MIWD00000PUS, which hit intraday highs earlier in the week, slipped 0.2% and was set for a 0.9% weekly loss. Europe's Stoxx 600 share index .STOXX was 0.5% lower.

Nvidia .NVDA, the $2.6 trillion chipmaker, has contributed about a third of total U.S. stock market returns this year meaning the run-up to its quarterly earnings on Wednesday kept traders on edge for days.

The AI giant's shares have gained 12% this week, but failed to lift broader sentiment after surveys showed U.S. business activity was improving but companies were also reporting higher prices across a sweep of input categories, from timber to wages.

Wall Street's S&P 500 share index SPX is 0.7% lower this week, although stock futures Esc1 suggested it would tick higher on Friday.

Minutes from the Federal Reserve's last meeting released on Wednesday showed some policymakers might consider hiking benchmark interest rates beyond their current 23-year high of 5.25%-5.5% if inflation does not fall steadily towards an average 2% target.

Traders expect just 35 basis points (bps) of Fed rate cuts in 2024, versus 150 bps at the start of the year. FEDWATCH.

Premier Miton Investors chief investment officer Neil Birrell said stock markets may not rally much further if higher rate forecasts keep lifting the income yields on government bonds and make stocks less attractive in comparison.

"Earnings are strong but the bar for the sort of upside surprise needed to push markets higher is rising," he said.

"A rise in (U.S.) Treasury yields back towards 5% is the sort of thing people get worried about."

Stocks were shaken in October when the yield on the benchmark 10-year Treasury US10YT=RR hit 5%. This key debt yield, which climbs as the price of the security falls in response to expectations of higher rates, touched 4.498% on Thursday and was last at 4.475%.

Ross Yarrow, managing director of U.S. equities at investment bank Baird, said it was not the time to sell out of the tech stocks that dominate U.S. and world equity markets.

"There are significant risks in not owning stocks that have become very large contributors to the market," he said.

"But inflation, and specifically inflation driven by oil, is also a big risk."

ECB CUT IN JUNE

The European Central Bank (ECB) has all but committed to a rate cut in June but its policymakers have warned further easing may not be warranted because they expect inflation, which has moderated substantially, to hover above their 2% target until 2025.

The yield on Germany's 10-year bund DE10YT=RR, last at 2.57%, has risen by the most in a week since mid-April.

The dollar index =USD, which measures the U.S. currency against a basket of six major peers, was up 0.4% on the week to 105.06, its largest one-week rise since mid-April. FRX/. The dollar has gained 0.4% against the euro and about 0.9% versus Japan's flailing yen.

Sterling GBP=D3 was muted on Friday at $1.269, having touched a two-month high of $1.2761 on Wednesday after data showed UK inflation did not slow as much as expected in April.

British Prime Minister Rishi Sunak announced on Wednesday a general election for July 4, with polls showing a big lead for his Labour Party rival Keir Starmer, who may become the nation's sixth leader in eight years following intense political turmoil.

British government bonds have underperformed major peers this week, with the 10-year gilt yield UK10YT=RR 12 bps higher at 4.25% and the interest rate sensitive two-year yield UK10YT=RR up 16 bps to 4.5%.

Elsewhere, Brent crude oil LCOc1 was 0.5% lower at $80.98. Gold XAU= rose 0.5% to $2340 per ounce. GOL/

Editing by Lincoln Feast, Michael Perry, Alex Richardson and Susan Fenton

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