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GLOBAL MARKETS-Stocks fall after touching six-week high, dollar weaker after U.S. data

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(Updates with close of European markets, adds earnings data)

* MSCI World index edges higher

* S&P 500 little changed but social media stocks weigh

* Euro down vs dollar, but eyes best week in 2 months

By Chuck Mikolajczak

NEW YORK, July 22 (Reuters) - A gauge of global stocks fell on Friday, poised to end the trading week on a down note after five straight sessions of gains, while the dollar dipped against a basket of major currencies following soft data on U.S. business activity.

Wall Street posted modest losses in early trading but declines on the S&P 500 accelerated as names such as Meta and Alphabet lost ground in the wake of earnings from Snap Inc, which plunged 38.23%. Defensive sectors such as utilities and consumer staples were among the few advancers.

"This can be interpreted as a warning signal that profitability is under pressure as the economic environment is slowing," said Lindsey Bell, chief money & markets strategist at Ally Invest, Charlotte, North Carolina.

With 106 of the S&P 500 companies having reported earnings through Friday morning, 75.5% have topped analyst expectations, below the 81% beat rate over the past four quarters, according to Refinitiv data.

The Dow Jones Industrial Average fell 225.5 points, or 0.7%, to 31,811.4, the S&P 500 lost 50.38 points, or 1.26%, to 3,948.57 and the Nasdaq Composite dropped 259.89 points, or 2.16%, to 11,799.72.

Still, the benchmark S&P index was up more than 2% for the week and on pace for its biggest weekly percentage gain in four.

S&P Global on Friday said its preliminary U.S. Composite PMI Output Index had tumbled far more than expected to 47.5 this month from a final reading of 52.3 in June, the first contraction in almost two years.

Recent data has showed signs of a slowing economy, but the Federal Reserve is still widely expected to raise U.S. interest rates by 75 basis points at its policy meeting to combat inflation. On Thursday, the European Central Bank (ECB) raised rates by 50 basis points after weeks of indicating a 25 basis point hike was in the offing.

The pan-European STOXX 600 index closed up 0.31% and MSCI's gauge of stocks across the globe shed 0.70% after climbing to 623.79, its highest level since June 10. The STOXX 600 notched in biggest weekly percentage gain in two months, in part due to easing concerns over a potential energy crisis.

The dollar lost ground on the heels of the business activity data, as investors weighed slowing economic activity against easing inflation.

The dollar index fell 0.122%, with the euro down 0.07% to $1.0221.

The euro slipped in choppy trading after data showed euro zone business activity also unexpectedly contracted this month, with companies continuing to report rising costs as inflation bites, hitting consumer demand and weighing on the outlook, a survey showed.

After touching a 20-year high last week, the dollar was on track for its biggest weekly percentage decline in 5-1/2 months.

The Japanese yen strengthened 0.95% versus the greenback at 136.06 per dollar, while Sterling was last trading at $1.2001, up 0.07% on the day.

Benchmark 10-year notes last rose 36/32 in price to yield 2.7777%, from 2.908% late on Thursday, earlier hitting a two-month low of 2.732%.

"The market is quickly pricing out the possibility of the Fed being able to raise rates aggressively for the remainder of the year," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York.

U.S. crude recently fell 0.51% to $95.86 per barrel and Brent was at $104.16, up 0.29% on the day.

(Additional reporting by Rodrigo Campos in New York, Shreyashi Sanyal and Aniruddha Ghosh in Bengaluru; Editing by Nick Zieminski and David Gregorio)