A look at the day ahead in U.S. and global markets from Mike Dolan Wall Street looks set to end the shortened week slightly punch drunk, with Friday's May inflation update set to be a decider after a slew of conflicting economic data signals and the latest election twist.

The Federal Reserve's favored PCE inflation gauge is due out early on Friday. Consensus forecasts for a 0.3% monthly increase in the core measure and annual rate stuck at 2.8% are still likely too high for Fed officials to give a green light on easing interest rates.

Still, a rough week for bonds calmed down a bit on Thursday after news that U.S. first quarter GDP and inflation readings were revised down a touch, home sales plunged in April and jobless claims ticked higher.

The latest sweep of Fed speakers also sounded more sanguine about the hopes for continued disinflation.

Without signaling any urgency in cutting rates, New York Fed boss John Williams said rates would be cut "at some point." Dallas Fed chief Lorie Logan reiterated that it was still "too soon" to be thinking about easing.

However, the better bond market mood did little to lift stocks. The S&P500 lost 0.6% on Thursday and, dragged down by a near 20% post-earnings swoon in Salesforce shares, the Nasdaq lost more than 1%.

Futures stayed in the red before Friday's bell and the VIX volatility index stayed elevated at about 14.5.

There was no obvious market reaction to the potentially seismic political news overnight that Donald Trump became the first U.S. president to be convicted of a crime. A New York jury found him guilty of falsifying documents to cover up a payment to silence a porn star ahead of the 2016 election.

Although polling shows most voters see the conviction as 'serious', markets seem wary of reading any implications for November's presidential election race - not least because they have yet to fix on what a Trump return to the White House would mean for asset markets and economy anyhow.

And much has yet to play out in terms of sentencing, appeals and what it means for Trump's candidacy within the Republican party. Even in the unlikely event he faced prison, he would still not be constitutionally barred from becoming president.

Overseas markets remained in thrall to the U.S. inflation and Fed picture for the most part.

The dollar was steady for the most part, although the euro nudged higher after euro zone May inflation came in slightly above forecasts - even if still below 3%.

While the update is unlikely to cut across the European Central Bank's expected quarter-point interest rate cut next week, full-year ECB easing expectations slipped back further to 55 basis points.

Euro zone bond markets now look ahead to sovereign credit rating reviews for Italy, France, Greece and Ireland later on Friday.

China's manufacturing activity unexpectedly fell in May, keeping alive calls for fresh stimulus as a protracted property crisis in the world's second-largest economy continues to weigh on business, consumer and investor confidence.

Elsewhere, South Africa's rand fell to a five-week low as results from this week's election showed the African National Congress had fallen short of a majority - setting up an uncertain period of coalition building ahead.

Mexico's peso was also on the backfoot ahead of the weekend presidential elections there.

Oil prices held steady ahead of Sunday's OPEC+ meeting, with the producer group working on a complex deal that would allow it to extend some of its deep oil production cuts into 2025.

In other news, the Wall Street Journal reported that Bill Ackman is considering selling a stake his Pershing Square firm that would value the company at about $10.5 billion.

Key diary items that may provide direction to U.S. markets later on Friday: * US April personal income and consumption and 'core' PCE inflation readings for the month, Chicago May business survey; Canada Q1 GDP revision * Atlanta Federal Reserve President Raphael Bostic speaks

(By Mike Dolan, editing by Gareth Jones mike.dolan@thomsonreuters.com)