* China drags Asia shares lower; Europe flat
* Wall St drops after weak industrial earnings, hawkish Fed
* 10-year U.S. yield climbs to 3.217 percent
* Oil falls further on rising U.S. inventories (Updates prices, changes comment, dateline from previous LONDON)
By Rodrigo Campos
NEW YORK, Oct 18 (Reuters) - The U.S. dollar index rose on Thursday alongside Treasury yields after Federal Reserve policymakers showed unity in favoring more rate hikes next year.
Stocks, already under pressure from rising borrowing costs, were further weighed by concern over a simmering U.S.-Sino trade war. Shanghai's benchmark index closed at a near four-year low and China's premier warned of risks to the economy.
European shares were little changed and the S&P 500 was on track to fall for the ninth session in the past eleven.
Minutes of the Federal Reserve's latest meeting showed every Fed policymaker backed raising interest rates last month and also generally agreed that borrowing costs were set to rise further.
That reinforced expectations that U.S. yields will rise further despite President Donald Trump's view that the Fed is tightening too much.
"If interest rates continue to move higher from their current levels, investors will become even more reluctant to buy the dips in stocks," Hussein Sayed, chief market strategist at FXTM, wrote in a note.
The Dow Jones Industrial Average fell 45.49 points, or 0.18 percent, to 25,661.19, the S&P 500 lost 6.26 points, or 0.22 percent, to 2,802.95 and the Nasdaq Composite dropped 44.42 points, or 0.58 percent, to 7,598.28.
The pan-European STOXX 600 index rose 0.04 percent and MSCI's gauge of stocks across the globe shed 0.37 percent.
Emerging market assets were weighed by the rising dollar.
"The last thing emerging markets, or the U.S. yield curve or equities, want is a reminder that U.S. rates are going to keep going up," Rabobank analysts told clients in a note.
Emerging market stocks lost 0.97 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.56 percent lower.
Japan's Nikkei lost 0.80 percent.
The greenback slightly extended the previous day's gains against a basket of its rivals on the Fed's perceived hawkish stance.
The dollar index rose 0.18 percent, with the euro down 0.09 percent to $1.1489.
The Japanese yen strengthened 0.12 percent versus the greenback at 112.52 per dollar, while Sterling was last trading at $1.3071, down 0.32 percent on the day.
In its semi-annual currency report, the U.S. Treasury Department said a recent depreciation of China's yuan currency will likely exacerbate the U.S. trade deficit, and U.S. officials found Beijing appeared to be doing little to directly intervene in the currency's value.
The yuan fell 0.16 percent to 6.9387 per dollar, its weakest level since January 2017.
Oil prices fell as the fourth weekly increase in U.S. crude inventories suggested ample supply, while Saudi-U.S. tension and falling Iranian exports kept the decline in check.
"Stocks are building," said Olivier Jakob, oil analyst at Petromatrix. "It's a continuous trend. Week after week, it does start to add up."
U.S. crude fell 0.4 percent to $69.47 per barrel and Brent was last at $79.54, down 0.64 percent on the day.
In the Treasuries market, the 10-year yield hit a one-week high on worries about the number of interest rate increases from the Fed.
Benchmark 10-year notes last fell 6/32 in price to yield 3.2013 percent, from 3.179 percent late on Wednesday.
The 30-year bond last fell 15/32 in price to yield 3.3713 percent, from 3.346 percent late on Wednesday.
Reporting by Rodrigo Campos, Karen Brettell and Richard Leong in New York; additional reporting by Tom Finn in London and Medha Singh in Bengaluru; Editing by Nick Zieminski