GLOBAL MARKETS-Stocks gain, dollar dips after 'dovish' Yellen speech

* Dollar steady near post-job report lows, lifting oil

* Wall Street up as energy, financials gain

* Yellen sees rates hikes, mostly good economic picture (Updates with reaction to Yellen remarks, adds European shares' close)

By Saqib Iqbal Ahmed

NEW YORK, June 6 (Reuters) - World stocks gained on Monday while the U.S (Other OTC: UBGXF - news) . dollar edged lower against a basket of currencies after Federal Reserve Chair Janet Yellen said U.S. interest rate hikes are likely on the way, but dropped a reference to the timing of the hike.

U.S. Treasury yields pared gains and oil prices pulled back from a seven-month high after Yellen's remarks.

In the last public comment from any U.S. central banker before the policy meeting next week, the Fed chief said last month's jobs report was "disappointing" and bears watching, though she warned against attaching too much significance to it on its own.

"If incoming data are consistent with labor market conditions strengthening and inflation making progress toward our 2-percent objective, as I expect, further gradual increases in the federal funds rate are likely to be appropriate," Yellen said at the World Affairs Council of Philadelphia.

She (Munich: SOQ.MU - news) was careful, however, not to give a time-frame for raising interest rates, in contrast to a speech on May 27, when she said "probably in coming months such a move would be appropriate."

"Going into the talk, there was a feeling this would be extremely dovish. It (Other OTC: ITGL - news) 's dovish but not extremely dovish," said Bucky Hellwig, senior vice president at BB&T Wealth Management, in Birmingham, Alabama.

"I think she's still committed to rate hikes, but she is emphasizing there's not a timetable. She didn't say 'in the next few months,' which is dovish," Hellwig said.

The greenback, which suffered its biggest one-day drop against a basket of major currencies in four months on Friday after a poor payrolls report, was last down 0.07 percent at 93.964.

World equity markets were higher, and the MSCI (NYSE: MSCI - news) 's all-country world equity index was up 0.53 percent, on pace for its third session of gains.

On Wall Street, the Dow Jones industrial average was up 123.1 points, or 0.69 percent, at 17,930.16, the S&P 500 was up 11.3 points, or 0.54 percent, at 2,110.43 and the Nasdaq Composite added 31.06 points, or 0.63 percent, at 4,973.57.

Europe's broad FTSEurofirst 300 index closed up 0.35 percent at 1,344.19, bolstered by gains in major mining and oil company shares, including Anglo American (LSE: AAL.L - news) , Rio Tinto (LSE: RIO.L - news) and BHP Billiton (NYSE: BBL - news) .

In the U.S. Treasury market, yields gave back some earlier gains following Yellen's comments. Benchmark 10-year notes were down 5/32 in price to yield 1.7211 percent, up from a two-month low of 1.697 percent on Friday.

Global oil benchmark Brent initially hit seven-month highs on worries about plummeting Nigerian production but cut gains after Yellen's remarks that U.S. interest rates could rise this year.

Brent crude was last up 1.23 percent, at $50.25 a barrel. U.S. crude was last up 1.44 percent at $49.32 per barrel.

Spot gold prices held steady near a 2-week high and was last down 0.04 percent to $1,243.11 an ounce. (Additional reporting by Caroline Valetkevitch, Karen Brettell and Richard Leong in New York; Editing by Bernadette Baum and Nick Zieminski)