GLOBAL MARKETS-Inflation data pressures Wall Street shares, offsets

* Wall Street shares reverse early gains after inflation data

* Oil up on U.S. supply concerns (Updates with indexes reversing gains)

By Chris Prentice and Simon Jessop

WASHINGTON/LONDON, Sept 10 (Reuters) – Wall Street main indexes reversed early gains on Friday after data showing persistent U.S. inflation offset expectations of an easing in U.S.-China tensions after a call between President Joe Biden and China’s Xi Jinping.

U.S. producer prices increased solidly in August, indicating that high inflation is likely to persist for a while, with supply chains remaining tight as the COVID-19 pandemic drags on.

“Headlines reflecting the highest annual producer price increases in decades won’t give those worried about inflation much comfort, but the smaller month-over-month increase and recent evidence indicating supply chain bottlenecks are no longer intensifying suggest a peak in producer inflation may be near,” said Marc Zabicki, Director of Research for LPL Financial.

The Dow Jones Industrial Average fell 64.65 points, or 0.19 percent, to 34,814.73; the S&P 500 lost 4.21 points, or 0.09 percent, to 4,489.07 and the Nasdaq Composite dropped 3.20 points, or 0.02 percent, to 15,245.06 by 1:55 p.m. EDT (1755 GMT).

Earlier in the session, global equities markets gained after news that the U.S. president and his Chinese counterpart spoke for 90 minutes on Thursday in their first talks in seven months, discussing the need to avoid letting competition between the world’s two largest economies veer into conflict.

That helped China shares rise 0.08%, giving a fillip to the region and lifting MSCI’s World index , its broadest gauge of global stock markets 0.07%, on course to end a three-day losing streak.

Despite the gains, helped by a similar performance across Europe’s top markets, the index remains down 0.6% on the week and on course for its first drop in three, albeit hovering near a record high.

Apple Inc fell 2.7% following a U.S. court ruling in “Fortnite” creator Epic Games’ antitrust lawsuit that struck down some of the iPhone maker’s restrictions on how developers can collect payments in apps.

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The pace at which central banks, especially the U.S. Federal Reserve and European Central Bank, choose to trim their economic support remains the driving force of market sentiment amid rising inflation concerns.

Thursday’s move by the ECB to trim its bond purchases, albeit only slightly, is expected to be followed by the Fed later this year, according to some officials, despite a weak August U.S. jobs report.

“With the ECB raising its economic projections for 2022 and beyond, it appears that the high-water mark in policy accommodation has been passed,” said Mark Dowding, chief investment officer at BlueBay Asset Management.

Looking ahead, Dowding said next week’s U.S. inflation print could help dictate near-term market direction.

Despite the prospect of stimulus packages being reined in further in the coming months, Mark Haefele, chief investment officer…