Updates prices to U.S. afternoon trading

By Sinéad Carew and Amanda Cooper

NEW YORK/LONDON, June 9 (Reuters) - MSCI's global equities gauge lost ground on Tuesday as heavyweight U.S. technology stocks stumbled and investors opted for safer bets, while oil prices fell as updates from the Middle East brought little clarity on progress towards peace.

On Monday, Iran and Israel had boosted hopes that tensions would ease as they said they would stop attacking each other. But U.S. President Donald Trump said on Tuesday that Iran had shot down a U.S. Apache helicopter that was patrolling the Strait of Hormuz overnight and vowed to respond, without providing details.

This was after Israel attacked the historic port city of Tyre in southern Lebanon on Tuesday, killing at least eight people. Tehran had warned on Monday that it would resume hostilities if Israel continued to attack its ally Hezbollah in Lebanon.

Meanwhile, the U.S. Energy Information Administration said oil stockpiles in the world's largest economies were headed towards their lowest levels since at least 2003. The EIA also said it expects global oil demand to decline in 2026, reversing its earlier forecast for an increase.

In equities, Wall Street's main indexes lost ground as the session wore on, with the S&P 500's heavyweight technology sector .SPLRCT falling sharply. Sahak Manuelian, managing director for global equities trading at Wedbush Securities, said investors were selling technology stocks and rotating into more defensive sectors such as real estate .SPLRCR, utilities .SPLRCU and healthcare .SPXHC.

"Today we tried to rally early and it was very, very short-lived," said Manuelian, adding investors were shedding stocks that had gained a lot and preparing for the highly anticipated market debut of Elon Musk's SpaceX later this week.

"Investors are looking at their portfolios and seeing how much tech has moved and then also coming to grips with the SpaceX IPO, which is scheduled for this Friday, and probably have to bookmark some dollars for that. They're trying to take some profits off some of these other things that have run so much in such a short period of time and probably looking to see where they can chase alpha in other sectors of the market," he said.

INFLATION AND RATE WORRIES

Another worry is the scheduled release of consumer inflation data, which is due out on Wednesday, according to Gene Goldman, chief investment officer at Cetera, who sees inflation concerns highlighting the Federal Reserve's next interest rate policy moves.

"There is a lingering bit of caution as investors are a bit worried about tomorrow’s potentially high inflation readings. Higher-than-expected inflation further brings the Fed to the forefront as a headline risk," Goldman said.

Since the release on Friday of a stronger-than-expected jobs report for May, traders have increased bets that the Fed will hike rates, with the probability for a 25-basis-point increase by December close to 43% and bets on a 50-basis-point increase above 20%, up from 12% last week, according to CME Group's FedWatch tool.

On Wall Street, at 1:49 p.m. ET (1749 GMT), the Dow Jones Industrial Average .DJI fell 125.53 points, or 0.24%, to 50,662.70, the S&P 500 .SPX fell 81.16 points, or 1.10%, to 7,324.57 and the Nasdaq Composite .IXIC fell 539.94 points, or 2.07%, to 25,391.55.

MSCI's gauge of stocks across the globe .MIWD00000PUS fell 4.45 points, or 0.40%, to 1,096.51.

The pan-European STOXX 600 .STOXX index finished down 0.5% after rising earlier.

The CBOE volatility index .VIX, sometimes referred to as Wall Street's fear gauge, was last up 1.49 points at 20.37 after earlier hitting 23.34, which was its highest level since April 7.

In currencies, the dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.12% to 99.92, with the euro EUR= up 0.11% at $1.1547.

Against the Japanese yen JPY=, the dollar strengthened 0.08% to 160.3.

In cryptocurrencies, bitcoin BTC= fell 2.99% to $61,576.95. Ethereum ETH= declined 2.97% to $1,639.16.

U.S. Treasury yields edged lower as traders waited for May's consumer inflation report for signs of whether price pressures are continuing to build.

The yield on benchmark U.S. 10-year notes US10YT=RR fell 1.8 basis points to 4.532%, from 4.55% late on Monday. The 30-year bond US30YT=RR yield fell 1.5 basis points to 5.0089%.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 3.1 basis points to 4.127%, from 4.158% late on Monday.

In energy markets, U.S. crude CLc1 settled down 3.4%, or ,$3.10, at $88.20 a barrel. Brent LCOc1 was at $91.62 per barrel, down 2.79% on the day.

In precious metals, gold prices fell, tracking a broader market selloff on rising expectations of a U.S. interest rate hike this year, while investor focus turned to the inflation data due later this week.

Spot gold XAU= fell 1.68% to $4,255.99 an ounce while spot silver XAG= fell 4.7% to $64.96 an ounce.