* U.S. retail sales data tops expectations
* German investor morale survey worse-than-expected
* Mounting 'no-deal' Brexit worries weigh on pound (Updates with close of European markets, Trump comments)
NEW YORK, July 16 (Reuters) - A gauge of global equities fell on Tuesday and U.S. Treasury yields climbed as a stronger-than-anticipated report on retail sales raised the possibility the Federal Reserve could move towards a less dovish stance.
U.S. retail sales rose 0.4% in June, as households stepped up purchases of motor vehicles and a variety of other goods. The solid number comes on the heels of recent data showing a strong labor market and a pickup in consumer prices.
While the Fed is still largely expected to cut rates by a quarter of a percentage point at its July 30-31 policy meeting, expectations for a more aggressive half a percentage point cut have been scaled back.
"There's a lot of upside surprises in the details," said Tom Simons, a money market economist at Jefferies in New York.
"This is certainly bond negative because it suggests that the economy is still doing really well and the Fed is about to add some more fuel to the fire, and maybe we do get some inflation," Simons said.
Other data showed manufacturing output in the United States picked up steam in June, while import prices declined the most in six months.
The data boosted U.S. Treasury yields, while the improving economic picture has seen the U.S. yield curve steepen in the past week.
The Dow Jones Industrial Average fell 17.78 points, or 0.06%, to 27,341.38, the S&P 500 fell 10.24 points, or 0.34%, to 3,004.06 and the Nasdaq Composite dropped 36.96 points, or 0.45%, to 8,221.23.
With earnings season underway, banking shares were in focus after a mixed bag of results from JPMorgan, Goldman Sachs and Wells Fargo. The S&P banks sector was off 0.7%.
Stocks also moved lower following comments from U.S. President Donald Trump that the U.S. still has "a long way to go" to conclude a trade deal with China, and could impose tariffs on an additional $325 billion in Chinese goods.
Benchmark 10-year notes last fell 8/32 in price to yield 2.1183%, compared with 2.092% late on Monday.
European equities rose as disappointing data out of Germany and new concerns over Brexit helped boost expectations for stimulus from the European Central Bank, along with strong gains from shares of British fashion brand Burberry.
Germany's ZEW indicator showed that the mood among investors in Europe's largest economy deteriorated more than expected in July, with the survey pointing to the unresolved China-U.S. trade dispute and to political tensions with Iran.
The pan-European STOXX 600 index rose 0.35% and MSCI's gauge of stocks across the globe shed 0.27%.
The dollar strengthened versus the euro as a result of the disparate data while a debate between the two candidates to become Britain's next prime minister sent the pound tumbling because of heightened worries about a no-deal Brexit.
The dollar index rose 0.48%, with the euro down 0.46% to $1.1205. Sterling was last trading at $1.2405, down 0.89% on the day.