The dollar traded near weekly highs and US Treasury yields rose on Thursday as US gross domestic product data showed a pick-up in consumer spending and encouraged bets that hikes in US interest rates will start as soon as September.

Wall Street was off on disappointment that GDP data was slightly below forecasts, while oil prices shrugged off an earlier drag from the dollar's gains and edged ahead on an unexpectedly big drop in US oil inventories.

The euro fell 0.55 per cent against the dollar to $1.0924, which helped the dollar index rise 0.55 per cent at 97.511 after touching 97.591, its highest so far this week.

"The latest GDP report confirms the Fed's narrative that the first-quarter weakness was transitory. The bar for them to hiking rates is not very high," said Ian Gordon, G10 currency strategist at Bank of America Merrill Lynch in New York Data on Thursday showed economic growth in the United States accelerated in the second quarter, backed by solid consumer demand, to a 2.3 per cent annual rate.

While slightly below economists' expectations for 2.6 per cent growth, the data still pointed to firming domestic fundamentals.

The US Federal Reserve on Wednesday described the economy as expanding "moderately," with improvements in housing and the labour market.

That left the door open for a possible hike in interest rates in September, which would be the first rise since 2006. Treasury prices, which move in the opposite direction of yields, were mostly off. Benchmark 10-year Treasuries were down 2/32 of a point in price, pushing the yield to 2.2679 per cent.

The Dow Jones industrial average fell 74.99 points, or 0.42 percent, to 17,676.4, the S&P 500 declined 8.97 points, or 0.43 per cent, to 2,099.6 and the Nasdaq Composite eased 25.61 points, or 0.5 per cent, to 5,086.12.

Nine of the 10 major S&P sectors fell, with the consumer staples index's 0.61 per cent fall leading decliners.

Europe's main stock markets held on to a third day of modest gains as results from Siemens, Nokia and Deutsche Bank and a rise in euro zone-wide sentiment data boosted the mood.

With the dollar flexing its muscles again, commodity markets were back under pressure, with copper, considered a bellwether for global economic activity, trading near a six-year low at $5,268 a tonne.

The broad Thomson Reuters CRB commodities index hit a fresh six-year low before recovering some ground.

Gold was flirting with a 5-1/2-year low at $1,093 an ounce as its appeal ahead of potentially higher global interest rates remained in question.

Oil prices, smarting from rising US shale oil output and an easing of sanctions on Iran, were faring slightly better, having bounced on Wednesday following an unexpectedly large weekly drawdown in US crude inventories.

Front-month Brent crude futures were pegged up one per cent at $53.90 a barrel, and US crude was up to $49.18 having pulled away from Tuesday's 4-1/2-month low. They have both lost more than 15 per cent in July. - Reuters