GLOBAL MARKETS-U.S. stocks, oil fall as dollar slips to year low

* U.S. stocks slide despite strong U.S., Chinese data

* Euro hits fresh 2009 high, dollar index near 1-year low

* Oil falls below $70, gold rallies to 18-month high

* Government debt rallies on confidence rates to stay low (Updates with close of U.S. markets)

By Herbert Lash

NEW YORK, Sept 11 (Reuters) - Crude fell and U.S. stocks edged lower on Friday after five days of gains, even as encouraging U.S. and Chinese data and a sliding U.S. dollar were unable to provide oil and equity markets further lift.

The U.S. dollar fell for a fifth straight session to nearly a one-year low against other major currencies as the economic news raised recovery prospects and the low cost of borrowing in dollars encouraged investors to move cash into riskier assets.

The dollar's sell-off propelled the euro to a fresh 2009 high and sterling to a one-month peak, Reuters data showed.

The safe-haven dollar struggled this week as investors bet on recovery, with investors buying commodity-linked and higher-yielding currencies, which rallied this week.

"All of the indicators seem to suggest risk aversion is in decline," said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Connecticut.

October crude oil futures slipped nearly 4 percent to settle at $69.29 because of a higher-than-expected rise in refined fuel inventories. For details, see [ID:nN11437969]

U.S. stock losses were limited after FedEx Corp said earnings in this quarter and the next would be higher than Wall Street expectations, lifting its shares 6.4 percent. [ID:nN11440004]

"Both equities and oil are exhausted. Money has been coming out of the dollar into equities and holding up energy all this week," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

The Dow Jones industrial average <.DJI> lost 22.07 points, or 0.23 percent, at 9,605.41. The Standard & Poor's 500 Index <.SPX> shed 1.41 points, or 0.14 percent, at 1,042.73. The Nasdaq Composite Index <.IXIC> fell 3.12 points, or 0.15 percent, at 2,080.90.

For the week, the Dow rose 1.7 percent, the S&P 500 gained 2.6 percent and the Nasdaq climbed 3.1 percent.

U.S. stocks fell after Britain's leading share index closed at its highest in almost a year and European shares gained for a sixth consecutive day. [ID:nLB104412] [ID:nLB703390].

The pan-European FTSEurofirst 300 <.FTEU3> index of top shares ended 0.6 percent higher at 993.91, its highest closing level in 11 months.

U.S. and euro zone debt prices rose after a surprisingly well-received auction of 30-year U.S. Treasury debt further raised optimism, dousing concerns among investors about financing the U.S. government's enormous debt.

Nagging doubts over a sustained recovery, coupled with the view that inflation will stay low for some time, underpinned the strong demand for long-dated bonds, analysts said.

"We had a pretty good week. People are just taking some money off the table ahead of the weekend," said Ira Jersey, an interest rate strategist at RBC Capital Markets in New York.

Benchmark yields , which move inversely to their price, fell for a fifth straight week. Two-year note yields ended at their lowest since May after remarks from Federal Reserve officials signaled the U.S. central bank will keep short-term rates near zero in the foreseeable future. [ID:nN10399242]

Benchmark 10-year notes rose 5/32 in price for a 3.34 percent yield.

In Europe, the 10-year Bund future posted its biggest one-day gain in a month as the inverse relation between stocks and bonds broke down, reflecting increased confidence that U.S. and European interest rates would stay low for a long time.

"Investors (are) buying nearly every asset ... -- stocks and bonds simultaneously. The better data supports equity markets and liquidity supports the bond market," said Luca Cazzulani, a bond strategist at Unicredit in Milan.

The InterContinental Exchange's dollar index <.DXY>, a gauge of the U.S. currency's performance against six other major currencies, was down 0.17 percent at 76.690 after falling to 76.457, its lowest in nearly a year.

The euro was last trading at $1.4573 , about 2 percent higher on the week. The euro zone single currency hit a 2009 high of $1.4634 earlier, according to Reuters data.

A big drawdown in U.S. wholesale inventories and improving consumer confidence, rising more than expectations, built on recent evidence that a recovery was picking up speed. [ID:nN11377778]

The preliminary Reuters/University of Michigan Surveys of Consumers reading of consumer confidence for September rose to 70.2, the highest since June, from 65.7 in August.

Chinese data surprised on the upside in August. Industrial output grew at a 12-month high of 12.3 percent from a year earlier, investment growth picked up and annual growth in the broad M2 measure of money supply rose to a record 28.5 percent. [ID:nPEK13979]

December gold settled up $9.60 at $1,006.40 an ounce in New York

The MSCI index of Asia Pacific stocks traded outside Japan <.MIAPJ0000PUS> was up 0.6 percent, buoyed by strong Chinese economic data. Japan missed out on the uptick in Asian shares as the Nikkei stock index <.N225> fell 0.7 percent. (Reporting by Angela Moon, Edward McAllister, Gertrude Chavez-Dreyfuss and Richard Leong in New York; Jamie McGeever in London; Christoph Steitz in Frankfurt; writing by Herbert Lash)