(Updates to afternoon U.S. trading)
* Wall St stocks edge lower; U.S. Q4 GDP disappoints
* Dollar up for second day, U.S. bond yields fall
* European shares dip on banks, UBS results underwhelm
* Oil prices fall as focus shifts to U.S. output
By Saqib Iqbal Ahmed
NEW YORK, Jan 27 (Reuters) - A key index of global equity markets slipped from near record highs on Friday after underwhelming corporate earnings and U.S. economic growth data gave investors reason to pause following the recent sharp rally in equity prices.
The dollar shrugged off disappointing U.S. fourth-quarter gross domestic product numbers to extend its rally against a basket of currencies, and U.S. Treasury debt yields slipped as the data spurred buying of U.S. government debt.
MSCI's world index, which tracks shares in 46 countries, was down 0.12 and about 2 percent off its record high hit in April 2015. Weakness in Europe weighed on the index and it found little support on Wall Street.
Lackluster corporate results gave little reason to investors to push U.S. stocks higher.
Chevron fell 2.5 percent to $113.67 after its quarterly profit fell short of analysts' expectations. The stock was the biggest drag on the S&P 500 and the Dow Jones Industrial Average indexes.
"Earnings have really just been fine," said David Lyon, global investment specialist at J.P. Morgan Private Bank in San Francisco.
"They haven't been too hot, nor have there been any concerns or cautionary flags raised. I think 'fine' might not be enough in the near-term, and there is a growing concern that while the numbers have been good, the forward guidance have been just okay."
The Dow Jones Industrial Average fell 18.91 points, or 0.09 percent, to 20,082, the S&P 500 lost 3.62 points, or 0.16 percent, to 2,293.06 and the Nasdaq Composite added 0.07 points, or 0 percent, to 5,655.24.
European shares eased with UBS dragging bank stocks lower after posting a drop in full-year profit, while Britain's biggest supermarket, Tesco, surged after a 3.7 billion-pound takeover of a supplier.
The pan-European STOXX 600 index closed down 0.4 percent at 366.04.
The greenback, which has climbed for two straight days from a seven-week low against a basket of major currencies, was buoyed by hopes that U.S. President Donald Trump's pro-growth policies will further bolster the U.S. economy.
Increasing expectations of tax reforms and fiscal stimulus, which support the dollar, are temporarily soothing concerns about Trump's stance on trade protectionism, said Karl Schamotta, director of global product & market strategy at Cambridge Global Payments in Toronto.
The dollar retreated a little against a basket of currencies after data showed U.S. economic growth slowed more than expected to 1.9 percent in the fourth quarter but recouped losses to trade up 0.19 at 100.57.
The greenback rose to a one-week high of 115.37 against the yen.
The Mexican peso, which slumped on Thursday after the White House said Trump wants a 20-percent tax on imports from Mexico to pay for a wall on their shared border, strengthened more than 1 percent after the two countries agreed not to talk publicly for now about payment for the wall.
In bond markets, U.S. Treasury yields fell as investors reached for U.S. government debt following the disappointing fourth-quarter GDP data.
The benchmark 10-year Treasury yield was down 2 basis points at 2.486 percent.
Oil prices extended losses after data suggested drilling is ramping up in the United States, easing the focus on efforts by OPEC and other producers to support prices by cutting supplies.
Brent crude was down 1.64 percent at $55.32 a barrel, while U.S. crude was down 1.56 percent at $52.94.
Gold was on track for its first weekly loss of the year as persistent dollar strength prompted some traders to cash in on this week's rally to two-month highs. On Friday, spot gold was little changed at $1,189.81.
(Additional reporting by Gertrude Chavez-Dreyfuss in New York and Tanya Agrawal in Bengaluru; Editing by Bernadette Baum and Nick Zieminski)