Updates at 11:20 a.m. EDT

By Isla Binnie

NEW YORK, July 19 (Reuters) -World stock indexes fell on Friday as a global cyber outage rattled investors, while the dollar climbed and was on track to snap a two-week streak of declines.

The outage hit services from airlines to banks, unsettling markets further after a turbulent week.

Cybersecurity firm CrowdStrike CRWD.O fell 8.2% after an update to one of its products appeared to trigger the outage that affected customers using Microsoft's MSFT.O Windows Operating System, disrupting businesses across sectors.

Euronext exchange and London Stock Exchange Group's LSEG.L Workspace news and data platform also faced issues. LSEG later said its data and services were back online.

"Today's outages remind us that services can have supply chain disruptions too," said Jeff Kleintop, chief global investment strategist at Charles Schwab. "While not a cyberattack, the outage is a worrisome reminder of how our systems are deeply integrated."

The Cboe Volatility index .VIX - Wall Street's "fear gauge" - was at its highest level since early May.

MSCI's gauge of stocks across the globe .MIWD00000PUS fell 4.69 points, or 0.57%, to 812.76. The STOXX 600 .STOXX index fell 0.76%.

The Dow Jones Industrial Average .DJI fell 337.37 points, or 0.84%, to 40,327.65, the S&P 500 .SPX lost 17.55 points, or 0.30%, to 5,527.04 and the Nasdaq Composite .IXIC lost 56.06 points, or 0.32%, to 17,813.99.

U.S. megacaps were mixed. Nvidia NVDA.O lost around 1%, while Apple AAPL.O and Alphabet GOOGL.O stayed broadly positive.

U.S.-listed shares of Taiwan Semiconductor Manufacturing TSM.N extended earlier losses to shed around 3.5% on the day.

Microsoft MSFT.O was down 0.3% after the cloud disruption.

DOLLAR RECOVERS

In currency markets, the dollar made some headway after hitting a four-month low in the middle of the week.

The dollar index =USD, which measures the greenback against a basket of currencies, gained 0.17% to 104.32, with the euro EUR= down 0.1% at $1.0885.

It is set for a 0.2% gain for the week after two weeks of losses, supported by this week's firm economic data and Friday's jitters about the outage, even as conviction grows that the Fed could cut interest rates in September. FEDWATCH

The euro EUR= slipped 0.1% to $1.0885, having dipped the previous session after the European Central Bank kept rates on hold as expected, but left the door open to a September cut. The ECB downgraded its view of the euro zone's economic prospects.

Two ECB policymakers on Friday backed further interest-rate cuts, expressing greater confidence that inflation was heading to the central bank's goal next year.

U.S. Treasury yields rose, with little to drive market reaction as investors waited on fresh data next week.

The yield on benchmark U.S. 10-year notes US10YT=RR rose 4.5 basis points to 4.233%, from 4.188% late on Thursday.

In commodities, U.S. crude CLc1 lost 1.03% to $81.97 a barrel and Brent LCOc1 fell to $84.27 per barrel, down 0.99% on the day.

In cryptocurrencies, bitcoin BTC= gained 3.01% to $65,740.00, while spot gold XAU= lost 1.63% to $2,405.11 an ounce.

Reporting by Isla Binnie in New York
Additional reporting by Rae Wee in Singapore and Marc Jones, Amanda Cooper and Dhara Ranasinghe in London
Editing by Andrew Cawthorne, Arun Koyyur and Matthew Lewis

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