NEW YORK/LONDON, April 10 (Reuters) - Treasury yields surged while equity indexes sank on Wednesday after data showed U.S. consumer prices rose more than expected in March, eroding hopes for how much and how soon the Federal Reserve can cut interest rates.

In currencies, the dollar index rose after the data while the greenback rose to its highest level against Japan's yen since 1990, as traders watched to see if Japanese authorities would intervene to prop up the yen.

With rising costs for gasoline and shelter, the U.S. consumer price index rose 0.4% last month, in line with February, the Labor Department's Bureau of Labor Statistics (BLS) said. This put the year-on-year increase at 3.5%. Economists polled by Reuters had estimated a gain of 0.3% on the month and 3.4% year-on-year.

After the report traders pulled back on rate cut bets now reflecting a roughly 17% chance the Federal Reserve will cut rates in June, down from a roughly 62% chance a week ago. They also pushed bets for a July cut closer to 41% from around 76% last week according to CME Group's FedWatch tool.

"We're in this volatile sticky point right now where the Fed hasn't been able to say 'we've won.' They're going to want to see a more data points to give them confidence they'll achieve their 2% inflation goal," said Michael Hans, we can say Chief Investment Officer at Citizens Private Wealth.

"Today does not do that. It continues to reinforce that a patient approach is still prudent," he said. "The market is reacting because there were much higher expectations coming into to this data that were would be a cut in June or July."

On Wall Street at 02:57 p.m. the Dow Jones Industrial Average fell 554.73 points, or 1.43%, to 38,327.35, the S&P 500 lost 64.39 points, or 1.24%, to 5,145.47 and the Nasdaq Composite lost 190.42 points, or 1.17%, to 16,116.22.

MSCI's gauge of stocks across the globe fell 8.56 points, or 1.10%, to 770.66.

Earlier Europe's STOXX 600 index closed up 0.15%. The European Central Bank meets on Thursday and is not expected to change its rate, though it had earlier been indicating that a June rate cut was likely.

YEN WEAKENS

In Treasuries, the benchmark 10-year yield US10YT=RR rose over 10 basis points to its highest since mid-November after the inflation report.

The yield on benchmark U.S. 10-year notes rose 19.4 basis points to 4.56%, from 4.366% late on Tuesday while the 30-year bond yield rose 13.7 basis points to 4.6375% from 4.499% late on Tuesday.

The 2-year note yield, which typically moves in step with interest rate expectations, rose 22.6 basis points to 4.973%, after also hitting its highest point since mid-November.

In currencies, the dollar index gained 1.11% at 105.24, with the euro down 1.11% at $1.0734. Against the Japanese yen, the dollar strengthened 0.79% at 152.97.

Oil prices rallied after three sons of a Hamas leader were killed in an Israeli airstrike in the Gaza Strip, overshadowing ceasefire talks.

U.S. crude settled up 1.15%, or $0.98 at $86.21 a barrel and Brent ended at $90.48 per barrel, up 1.19%, or $1.06 on the day.

Gold prices slipped from record-high levels as the U.S. dollar as Treasury yields firmed after the inflation print.

Spot gold lost 1.07% to $2,327.39 an ounce. U.S. gold futures fell 0.41% to $2,333.80 an ounce.

(Reporting by Sinéad Carew, Herbert Lash, Stephen Culp, Scott Murdoch and Alun John; Editing by Christina Fincher, Jan Harvey, Alison Williams and David Gregorio)