(Updates with U.S. market action, changes byline, dateline from previous LONDON)
* Euro and sterling fall to 2-1/2 year lows
* Fed cuts rates by 25 basis points, further cuts uncertain
* Banks lead European stocks higher
* Emerging-market stocks on track for 7th session of losses
* Gold and industrial metals melt lower
By Rodrigo Campos
NEW YORK, Aug 1 (Reuters) - The dollar charged to its highest in more than two years on Thursday, trampling almost every market in its way, after the Federal Reserve dampened hopes for a lengthy run of U.S. interest rate cuts.
After the Fed lowered its benchmark rate by 25 basis points, Chairman Jerome Powell said that the central bank's first rate cut in over a decade was "not the beginning of a long series of rate cuts." were expecting a more dovish stance from the Fed and the dollar's reaction said it all. The dollar index .DXY surged to its highest in more than two years, euro/dollar dropped below $1.11 for the first time since May 2017, and Brexit-hobbled sterling hit 30-month lows just above $1.21 GBP= . /FRX
Stocks in Asia suffered the most from the dollar's strength, with China's main indexes down 0.8% and Japan's Nikkei up under 0.1%.
By the time stocks opened on Wall Street, the dollar's 0.4% overnight gain had been cut in half and tech shares lead a rally though it didn't fully make up for Wednesday's losses.
"It was always going to be a tough job for the Fed to be as dovish as stock markets hoped," said Chris Beauchamp, chief market analyst at IG, in a note.
The Dow Jones Industrial Average .DJI rose 289.74 points, or 1.08%, to 27,154.01, the S&P 500 .SPX gained 31.77 points, or 1.07%, to 3,012.15 and the Nasdaq Composite .IXIC added 129.71 points, or 1.59%, to 8,305.13.
The pan-European STOXX 600 index .STOXX rose 0.41% with support from bank shares. MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.47%.
Emerging market stocks lost 0.57%, on track for a seventh straight session of losses. After dropping 1.7% in July, the index is up 6.7% so far in 2019.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.62% lower, while Japan's Nikkei .N225 rose 0.09%.
In sovereign debt markets, U.S. Treasury yields fell further after an industry report suggested domestic manufacturing growth slowed to its weakest pace in nearly three years last month.
Earlier, data showed manufacturing activity in the euro zone fell at its steepest rate since late 2012 last month, figures showed. ECUR/PMIM
Benchmark 10-year notes US10YT=RR last rose 18/32 in price to yield 1.9606%, from 2.021% late on Wednesday.
The dollar strength notwithstanding, both the euro and the pound were gripped by their own issues. Fears of a no-deal Brexit under Prime Minister Boris Johnson continue to afflict the pound, while the weak data and central bank outlook kept downward pressure on the euro.
"Financial stability is not the same as market stability. In the event of no-deal, no transition Brexit, sterling would likely fall, the risk premiums on UK assets would rise and volatility would spike higher," said Mark Carney, the head of the Bank of England.
The dollar index .DXY rose 0.08%, with the euro EUR= down 0.13% to $1.106.
Sterling GBP= was last trading at $1.2138, down 0.16% on the day.
The Japanese yen strengthened 0.44% versus the greenback at 108.30 per dollar.
The dollar strength and rising U.S. supply sent oil prices sharply lower after a string of gains, while other dollar-denominated commodities also fell. The CRB commodity index .TRCCRB fell 1.5%.
U.S. crude CLc1 fell 3.11% to $56.76 per barrel and Brent LCOc1 was last at $63.42, down 2.51% on the day.
U.S. gold futures GCc1 fell 0.65% to $1,416.90 an ounce. Copper CMCU3 lost 0.33% to $5,907.50 a tonne.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Pound has taken a pounding this year
https://tmsnrt.rs/2MzIqTp Global assets in 2019
http://tmsnrt.rs/2jvdmXl Global currencies vs. dollar
http://tmsnrt.rs/2egbfVh Emerging markets in 2019
http://tmsnrt.rs/2ihRugV
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