GLOBAL MARKETS-Stocks indexes fall, dollar rises on rate-hike bets

* Stocks lower on indexes around the globe

* Comments from Fed heads push investors to rethink July minutes

* Dollar rises on increased Fed hike odds (Updates to U.S (Other OTC: UBGXF - news) . market open, adds quotes, changes dateline, previous LONDON)

By Dion Rabouin

NEW YORK, Aug 19 (Reuters) - U.S. stock markets opened lower on Friday and a gauge of major world indexes fell while the dollar strengthened, as investors began to price in a greater likelihood that the Federal Reserve would raise U.S. short-term interest rates this year.

European share markets were poised for their biggest weekly loss in two months, while crude oil snapped a winning streak as weak fundamentals offset hopes for a possible output freeze.

Comments from Fed policymakers in recent days that suggest a bias toward raising U.S. interest rates have pushed investors to re-examine minutes from the U.S. central bank's most recent meeting, analysts said.

"The focus this week has been on the Fed minutes, which on balance to this reader seemed to suggest that there was a greater likelihood of an interest rate increase before the end of the year, and markets have not been counting on Fed action in that horizon," said Carl Tannenbaum, chief economist for Northern Trust in Chicago.

"Even (Taiwan OTC: 6436.TWO - news) though the minutes came out on Wednesday afternoon, I suspect that participants are still digesting their contents and updating their expectations."

New York Fed President William Dudley on Thursday lauded the strong gains in U.S. employment after saying Tuesday the Fed could raise rates as soon as next month. San Francisco Fed chief John Williams called for the central bank Thursday to return to monetary tightening "sooner rather than later."

Investors are now looking to an annual meeting of central bankers from around the world in Jackson Hole, Wyoming, next week, at which Fed Chair Janet Yellen is expected to speak.

"There is a bit on uncertainty over the Fed's decision and Yellen's speech next week is motivating investors to take some money off the table," said Peter Cardillo, chief market economist at First Standard Financial in New York.

The benchmark S&P 500 index is up 7 percent this year. Its recent run to record highs has been partly supported by expectations that the Fed will continue to keep rates low, as well as some upbeat earnings and economic news.

European shares fell 1.14 percent on the day and 2 percent for the week, their biggest weekly loss since mid-June. All major sectors in Europe were in the red.

Trading volumes were thin amid a summer lull in the U.S. and Europe. Thursday's session was the quietest in terms activity across Europe's stock exchanges in nearly three months, according to Thomson Reuters (Dusseldorf: TOC.DU - news) data.

A gauge of stock markets around the world fell 0.5 percent.

Brent crude fell 0.7 percent to $50.55, ending a six-day run of gains. WTI light crude slipped 0.4 percent to $48.03.

In currency markets, the dollar was higher against six major world rivals amid revived Fed rate hike expectations. The dollar index rose 0.4 percent to 94.545, moving away from eight-week lows touched on Thursday.

Fed funds futures prices show investors now see a greater than 50 percent chance of a rate hike before year-end, according to CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch tool.

U.S. Treasury prices fell as traders locked in recent gains ahead of next week's government debt supply and the Jackson Hole meeting. Ten-year U.S. Treasury notes fell 15/32 in price to yield 1.588 percent.

(Reporting by Dion Rabouin; Additional reporting by Tanya Agrawal in Bangalore and Vikram Subhedar in London; Editing by Bernadette Baum)