* U.S. data mixed as growth seen stalling in Q3 * Commodity currencies rise * Sterling licking wounds, heads for worst week in a month * Graphic: World FX rates tmsnrt.rs/2RBWI5E (Recasts, adds new comment, U.S. data, FX table, byline, dateline, updates prices) By Gertrude Chavez-Dreyfuss and Ritvik Carvalho NEW YORK/LONDON, Oct 1 (Reuters) - The dollar fell for a second straight session on Friday, tracking declines in U.S. Treasury yields, as investors pared back their positions after recent sharp gains, though the decline was viewed as temporary. U.S. 10-year Treasury yields were last at 1.484%, down four basis points. For the week, the dollar index was on track for its largest percentage gain since late August, as investors looked to the Federal Reserve"s reduction of asset purchases in November and a possible rate hike late next year. "The Fed in no uncertain terms has turned hawkish at the September meeting. They have also raised the inflation forecast, which is actually above consensus expectations, which tells you that they are probably more nervous about inflation than they let on," said Mazen Issa, senior FX strategist, at TD Securities in New York. "We expect Treasury yields to rise further and within that we expect real yields to do the heavy lifting and that"s notable for the dollar. It will certainly be a U.S.-led real rates back-up, which should be dollar-positive." Cautious market sentiment due to COVID-19 concerns, wobbles in China"s growth and a Washington gridlock ahead of a looming deadline to lift the U.S. government"s borrowing limit has lent support to the dollar, seen as a safe-haven asset. In mid-morning trading, the dollar index slipped 0.3% to 94.047, having gained 0.8% this week, the largest weekly rise since late August. Friday"s batch of U.S. data was mixed, adding to weakness in the dollar ahead of the weekend. U.S. consumer spending increased more than expected in August, posting a 0.8% rise, but consumption was weaker than initially thought in July, dipping 0.1% instead of gaining 0.3%. Inflation remained elevated, but not by much. Core inflation as measured by the personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, was up 0.3% in August, unchanged from previous month. In manufacturing, data was more upbeat. The Institute for Supply Management (ISM) said its index of national factory activity increased to a reading of 61.1 last month from 59.9 in August. In other currencies, the euro was flat at $1.1587, falling about 1.1% for the week, on pace for its biggest percentage fall since June. The yen bounced back against the dollar from a 19-month low overnight, with the greenback last down 0.3% at 110.98 yen. Commodity currencies rallied against the dollar on Friday. The Australian dollar gained 0.5% to US$0.7266 and slumped 3.6% in the third quarter - the worst performance of any G10 currency against the dollar - as prices for Australia"s top export, iron ore, fell sharply. Sterling was also an underperformer last quarter, dropping 2.5%, and looks set to log its worst week in more than a month, amid growing supply chain problems. Sterling was last up 0.6% at $1.3560, just above a 9-month low at $1.3516. ======================================================== Currency bid prices at 11:14AM (1514 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 94.0670 94.3120 -0.24% 4.541% +94.3950 +93.9850 Euro/Dollar $1.1595 $1.1578 +0.15% -5.09% +$1.1607 +$1.1564 Dollar/Yen 111.0800 111.2800 -0.18% +7.51% +111.4850 +110.9050 Euro/Yen 128.76 128.82 -0.05% +1.45% +129.0400 +128.5600 Dollar/Swiss 0.9302 0.9317 -0.16% +5.14% +0.9337 +0.9283 Sterling/Dollar $1.3549 $1.3477 +0.54% -0.83% +$1.3570 +$1.3434 Dollar/Canadian 1.2665 1.2685 -0.11% -0.49% +1.2738 +1.2645 Aussie/Dollar $0.7260 $0.7227 +0.46% -5.62% +$0.7274 +$0.7193 Euro/Swiss 1.0784 1.0784 +0.00% -0.21% +1.0808 +1.0773 Euro/Sterling 0.8557 0.8593 -0.42% -4.25% +0.8623 +0.8547 NZ $0.6933 $0.6897 +0.48% -3.50% +$0.6944 +$0.6879 Dollar/Dollar Dollar/Norway 8.6285 8.7400 -1.24% +0.52% +8.7820 +8.6285 Euro/Norway 10.0062 10.1205 -1.13% -4.40% +10.1728 +10.0077 Dollar/Sweden 8.7635 8.7585 +0.14% +6.92% +8.7878 +8.7392 Euro/Sweden 10.1603 10.1460 +0.14% +0.85% +10.1755 +10.1403 ======================================================== Currency bid prices at 11:14AM (1514 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 94.0670 94.3120 -0.24% 4.541% +94.3950 +93.9850 Euro/Dollar $1.1595 $1.1578 +0.15% -5.09% +$1.1607 +$1.1564 Dollar/Yen 111.0800 111.2800 -0.18% +7.51% +111.4850 +110.9050 Euro/Yen 128.76 128.82 -0.05% +1.45% +129.0400 +128.5600 Dollar/Swiss 0.9302 0.9317 -0.16% +5.14% +0.9337 +0.9283 Sterling/Dollar $1.3549 $1.3477 +0.54% -0.83% +$1.3570 +$1.3434 Dollar/Canadian 1.2665 1.2685 -0.11% -0.49% +1.2738 +1.2645 Aussie/Dollar $0.7260 $0.7227 +0.46% -5.62% +$0.7274 +$0.7193 Euro/Swiss 1.0784 1.0784 +0.00% -0.21% +1.0808 +1.0773 Euro/Sterling 0.8557 0.8593 -0.42% -4.25% +0.8623 +0.8547 NZ $0.6933 $0.6897 +0.48% -3.50% +$0.6944 +$0.6879 Dollar/Dollar Dollar/Norway 8.6285 8.7400 -1.24% +0.52% +8.7820 +8.6285 Euro/Norway 10.0062 10.1205 -1.13% -4.40% +10.1728 +10.0077 Dollar/Sweden 8.7635 8.7585 +0.14% +6.92% +8.7878 +8.7392 Euro/Sweden 10.1603 10.1460 +0.14% +0.85% +10.1755 +10.1403 (Reporting by Gertrude Chavez-Dreyfuss in New York and Ritvik Carvalho in London; Additional reporting by Tom Westbrook in Singapore and Anushka Trivedi in Bengaluru; Editing by Nick Macfie, Chizu Nomiyama and David Evans) Our Standards: The Thomson Reuters Trust Principles.