GLOBAL MARKETS-Bond selloff cools; euro, stocks fall

(Corrects in para 15, euro hit a 10-week high against the dollar, not 10-year high)

* U.S., European bond yields retreat from year's peaks

* Yield pullback sends euro below 10-week high vs dollar

* Sterling dips as voters go to polls in national elections

* Wall Street opens mixed, European shares slip

By Richard Leong

NEW YORK, May 7 (Reuters) - The global bond market rout slowed on Thursday as long-term borrowing costs retreated from their highest level in more than five months, but the recent surge in yields kept pressure on stocks worldwide.

The absence of a deal between Greece and its creditors also remained a drag on stocks and the euro.

Investors' stampede from stocks and bonds this week sent major European indexes to their lowest in two months and major U.S. and Japanese gauges to the weakest in a month.

U.S. Federal Reserve Chair Janet Yellen's warning about high equity valuations on Wednesday added pressure to U.S. stocks ahead of Friday's U.S. jobs report, which may support expectations of a possible Fed rate increase later this year.

"After years of over wading in fixed income, a lot of bond investors are starting to take stock and pulling back in advance of these shifting policy moves," said Andrew Barber, chief market strategist at EagleView Capital in Wilmington (LSE: WIL.L - news) , Delaware.

A retreat in European bond yields from their session peaks cause the euro to decline from a 10-week high against the dollar.

Oil prices strengthened to their highest level so far in 2015 on data that showed the first weekly drop in U.S. crude inventories since January.

A stronger dollar and elevated bond yields touched off a second day of selling in gold.

Bond markets were at the center of this week's rout, prompted by heavy supply and less pessimism about Europe, with German Bunds on track for their biggest weekly spike in yields in over a decade.

Italian and Spanish yields hit 2 percent for the first time this year, French yields topped 1 percent and U.S. Treasuries , the benchmark for borrowing costs globally, briefly broke 2.3 percent.

Global yields receded from their initial Thursday peaks on bargain-hunting, led by Japanese investors who had been out of the market due to the three-day Golden Week holiday, analysts and traders said.

Shortly after they opened, the Dow Jones industrial average fell 2.76 points, or 0.02 percent, to 17,839.22, the S&P 500 was up 1.2 points, or 0.06 percent, at 2,081.35 and the Nasdaq Composite was UP 20.04 points, or 0.41 percent, at 4,939.69.

FTSEurofirst index of top European shares dipped 0.1 percent to 1,545.97, while Tokyo's Nikkei ended down 1.2 percent.

The MSCI world equity index, which tracks shares in 45 nations, fell 0.48 percent, to 432.66.

In the currency market, the euro hit a 10-week high against the dollar at $1.13920 earlier before easing down to $1.12780 , down 0.6 percent from Wednesday's close.

The dollar index firmed at 94.496, up 0.4 percent.

Sterling dipped 0.2 percent versus the greenback amid an expected tight parliamentary election.

Brent crude was last down 52 cents, or 0.77 percent, at $67.25 a barrel. U.S. crude was last down 69 cents, or down 1.13 percent, at $60.24 per barrel.

Spot gold prices fell $4.99 or 0.42 percent, to $1,186.31 an ounce. (Additional reporting Tanya Agrawal in Bangalore,; Marc Jones in London; Editing by Mark Heinrich and Nick Zieminski)