(Adds byline, dateline, adds comment in paragraphs 5-6, updates prices at 1140 ET (1540 GMT))
* Dollar soars against yen as BoJ tightening speculation fades
* Nasdaq rebalancing tipped to cause 'quirky' price action
* Markets look ahead to Fed, ECB, BoJ next week
NEW YORK/LONDON, July 21 (Reuters) - Global share markets traded little changed on Friday as most of the U.S. megacap stocks slipped, while the dollar soared against the yen after Reuters reported the Bank of Japan is leaning toward keeping its dovish monetary policy next week.
Gold prices slipped as the dollar rebounded to its highest level in more than a week as investors prepare for next week's big central bank policy meetings, including the BoJ, the U.S. Federal Reserve and the European Central Bank.
The yen weakened 1.13% to 141.68 per dollar, while the dollar index, a measure of the greenback against major trading currencies, rose 0.36%.
The three major U.S. stock indices rose as investors embrace the notion that this economic cycle is different and a hard landing can be avoided even as the Fed is expected to raise interest rates again at the end of a two-day meeting on July 26.
"This is an income-driven cycle as opposed to a credit cycle," said Garrett Melson, portfolio strategist at Natixis Investment Managers in Boston. "Real incomes are growing as inflation cools and corporate and household balance sheets are very, very robust and have excess cash," he said.
"Bottom line, the odds for a soft landing are very strong."
The Dow rose 0.25% on track to extend its winning streak to 10 consecutive sessions. The S&P 500 gained 0.32% and the Nasdaq Composite added 0.2%.
A special rebalancing of the Nasdaq 100 that takes effect before Monday's opening would likely cause some "quirky price action" in tech mega-caps, said Patrick Spencer, vice chair of equities at Baird.
The overhaul of the index to reduce its heavy weightings of the super megacaps such as Microsoft Corp and Apple Inc may exacerbate moves in these stocks during the ongoing earnings season, he said.
"The market got very over-bought," Spencer said. "If you haven't played this market, you've missed out."
MSCI's U.S.-centric gauge of stocks across the globe shed 0.03%, and the NYSE FANG+TM index , which includes the megacap stocks, slid 0.31%.
In Europe, the pan-European STOXX 600 index rose 0.31% as a slump in technology stocks was offset by gains in energy companies that tracked oil prices higher.
BoJ policymakers prefer to scrutinize more data to ensure wages and inflation keep rising before changing yield control policy, five sources familiar with the matter said. The report added there was no consensus within the central bank and the decision could still be a close call.
As Japanese inflation has stayed above the BoJ's target, traders have bet on the central bank ditching its yield curve control program, a move likely to cause the yen to strengthen.
"Markets were building up expectations which now look unlikely to play out," said Guillaume Paillat, a multi-asset manager at Aviva Investors.
Japan's benchmark 10-year government bond yield fell 5 bps to 0.41%, the lowest level since July 6, right before speculation for a hawkish tweak to policy this month began to ramp up.
The bond posted its biggest one-day fall since April.
In U.S. bond markets, Treasuries yields mostly eased after spending the previous session braced for further Fed hawkishness in response to an unexpected drop in weekly unemployment claims.
The two-year Treasury yield, which typically moves in step with interest rate expectations, rose 1.5 basis points at 4.854%, while the benchmark 10-year yield fell 3.1 basis points to 3.823%.
Oil prices edged higher, buoyed by evidence of tightening supplies and economic stimulus in slow-recovering China.
U.S. crude rose 1.08% to $76.47 per barrel and Brent was at $80.39, up 0.94% on the day.
Spot gold dropped 0.4% to $1,961.51 an ounce.
(Reporting by Herbert Lash, additional reporting by Naomi Rovnick in London; Stella Qiu; Editing by Conor Humphries, David Holmes and Marguerita Choy)
