(Adds oil settlement)
* Oil tumbles on slowing China demand, trade spat
* Dow dips on trade fears, S&P 500 gains on tech stocks
* Dollar index falls after early gains
By Caroline Valetkevitch and Herbert Lash
NEW YORK, Aug 8 (Reuters) - Oil prices slumped after Chinese import data showed a slowdown in demand and weighed on world equity markets, which traded near break-even as U.S. technology shares extended recent gains.
China announced retaliatory trade tariffs in response to the United States' decision to impose 25 percent tariffs on another $16 billion of Chinese goods starting on Aug. 23.
Stock markets have maintained an upward trend amid sturdy corporate results and data despite a tit-for-tat U.S.-Chinese trade battle, with the U.S. benchmark S&P index closing Tuesday less than half a percent off record highs set on Jan. 26.
"The S&P and the stock market are telling you how important the tariffs are, and the market is close to making new highs," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida.
"You've got full employment and wages are going up. Small business optimism is about the highest it's ever been. All of that is driving this."
Amazon, Facebook, Tencent and Apple chip supplier Taiwan Semiconductor led MSCI's all-country world index of global stock performance higher 0.07 percent, its fourth straight day of gains.
In Europe, the pan-regional FTSEurofirst 300 index of leading shares closed down 0.20 percent.
Trade-sensitive industrial companies were the biggest drag on the Dow, which was down marginally. The decline was led Boeing and Caterpillar Inc.
The Dow Jones Industrial Average fell 31.42 points, or 0.12 percent, to 25,597.49. The S&P 500 gained 2.15 points, or 0.08 percent, to 2,860.6 and the Nasdaq Composite added 14.40 points, or 0.18 percent, to 7,898.07.
In the oil market, the U.S.-China trade dispute weighed on prices. U.S. crude fell $2.23 to settle at $66.94 per barrel and Brent settled at $72.28, down $2.37 on the day.
China's crude imports recovered slightly in July after falling for the previous two months, but were still among the lowest this year due to a dropoff in demand from the country's smaller independent, or "teapot," refineries.
Retaliatory trade tariffs by China briefly boosted the dollar index, which rose as high as 95.417, near a more than one-year peak of 95.652 hit on July 19, before dropping back to trade lower on the day.
The dollar index fell 0.17 percent, with the euro up 0.19 percent to $1.1619. The Japanese yen firmed 0.38 percent versus the greenback at 110.99 per dollar.
Sterling dropped to its lowest levels in almost a year on concerns about Britain's exit from the European Union.
The pound dropped 0.34 percent to 1.2893. as investors ramped up bets on Britain leaving the EU without an agreement with Brussels.
U.S. Treasury yields were slightly lower after the government's record $26 billion sale of 10-year notes, the second leg of this week's $78 billion in quarterly refunding.
The 10-year auction followed mediocre demand for $34 billion worth of 3-year debt on Tuesday.
Benchmark 10-year notes rose 1/32 in price to yield 2.9693 percent.
Additional reporting by Sujata Rao in London, Hideyuki Sano in Tokyo; Editing by Bernadette Baum and Cynthia Osterman