LONDON, Feb 17 (Reuters) – Stock markets dropped across the globe on Friday and the dollar leapt to six-week highs as jobs data revived expectations the U.S. central bank would stick to its monetary tightening path.Data from the U.S. Labor Department overnight showed monthly producer prices had accelerated in January and the number of Americans filing new claims for unemployment benefits had unexpectedly fallen last week.The data was taken as a further sign that price pressures may remain stickier than markets believed at the start of the year, adding to inflation and jobs data out since the start of February that has sent jitters through global markets.MSCI’s broadest index of world stocks (.MIWD00000PUS) fell 0.4% at 1248 GMT to one-week lows of 645.65.MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.35% to 529.53 at 1248 GMT, its lowest since Jan. 9. The index is down 3% for the month and set for its third-straight week of losses.In Europe, the pan-European STOXX 600 index (.STOXX) dropped 0.38%, set for its first daily fall this week. The German DAX (.GDAXI) was down 0.93%. French blue chip stocks (.FCHI) and Britain’s FTSE (.FTSE) slipped from all-time highs, down 0.66% and 0.16% respectively, all by 1248 GMT.Latest UpdatesView 2 more stories Stock performance across the Atlantic was also set to follow suit with S&P 500 futures down 0.6%.Traders have raised their bets on how far they see the Fed hiking in recent sessions, and are now pricing in a peak at around 5.3% in July. Bets on a rate cut at year-end have declined, with traders pricing in only a 75% chance of a 25 bps rate cut in December.”Inflation doesn’t go up in a straight line and it won’t come down in a straight line. This week has been a wake up call for a lot of people,” said Michael Hewson, chief market analyst at CMC Markets UK.The buoyancy in U.S. markets since the start of the year was predicated on inflation peaking and then dropping sharply, he said.”For those looking for U.S. rate cuts at the end of this year, that’s now gone. Two-year yields on Treasuries are finally where they should be,” he added.Bets on higher peak rates have pushed two-year U.S. Treasury yields, sensitive to interest rate expectations, to three-month highs at 4.69%. The yield on 10-year Treasuries was up about 5 basis points at 3.88% on Friday at 1248 GMT.Boosted by bets on higher rates, the dollar index , which measures the U.S. currency against six major rivals, rose as much as 0.4% on Friday to 104.24, a fresh six-week high.That hurt the euro and sterling , with both falling to their lowest in over a month. The euro was down 0.5% at 1248 GMT at $1.0618, while sterling was last trading at $1.1943, down 0.4% on the day.It’s hard to gauge how markets will interpret the Fed’s next moves on inflation, said Florian Ielpo, head of macro at Lombard Odier Asset Management.”The markets are torn between two instruments. Intra-day stock prices and credit spreads see a lot of volatility and nervousness while there has been no surge in implied volatility options,” said Ielpo.Two Fed officials said on Thursday the U.S. central bank probably should have lifted interest rates more than it did earlier this month, and they warned that additional rises in borrowing costs were essential to lower inflation back to desired levels.At its Jan. 31 to Feb. 1 policy meeting, the Fed opted to moderate the pace of interest rate rises, lifting rates by 25 basis points to the 4.50%-4.75% range after a series of jumbo rate increases last year.Elsewhere, U.S. crude fell 3.30% to $75.91 per barrel and Brent was at $82.53, down over 3% on the day at the time of writing.Reporting by Nell Mackenzie; Editing by Yoruk Bahceli, Hugh Lawson and Sharon SingletonOur Standards: The Thomson Reuters Trust Principles.