GLOBAL MARKETS-Dollar, bond yields extend gains after Yellen

* U.S (Other OTC: UBGXF - news) . dollar adds to gains after Yellen comments

* U.S. stocks trim gains after Yellen speech (Updates with reaction to Yellen remarks, adds European shares' close)

By Saqib Iqbal Ahmed and Caroline Valetkevitch

NEW YORK, May 27 (Reuters) - The U.S. dollar added to gains while U.S. Treasury yields hit session highs on Friday after Federal Reserve Chair Janet Yellen said a U.S. interest rate hike will likely be appropriate in the coming months.

U.S. stocks pared their advance.

"It (Other OTC: ITGL - news) 's appropriate ... for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate," Yellen told an audience of Harvard University professors and alumni.

Numerous Fed officials in recent weeks have talked up expectations that an increase in borrowing costs may be near. After Yellen's speech, traders raised their expectations of a June rate hike to 34 percent from 30 percent, according to CME Group.

"People think June or July are very much alive now," said Stephen Massocca, chief investment officer at Wedbush Equity Management LLC in San Francisco.

"That epiphany took place days ago when the Fed minutes were released and so it's consistent with that. I don't think there was anything in here that was new news," he said.

On Wall Street, the Dow Jones industrial average was up 5.75 points, or 0.03 percent, to 17,834.04, the S&P 500 gained 2.75 points, or 0.13 percent, to 2,092.85 and the Nasdaq Composite added 14.40 points, or 0.29 percent, to 4,916.17.

MSCI (NYSE: MSCI - news) 's all-country world stock index was last up 0.1 percent. The pan-European FTSEurofirst 300 index of leading regional stocks closed up 0.2 percent.

The dollar index was up 0.50 percent and on track for its strongest monthly performance since November.

Also boosting the dollar, U.S. data earlier on Friday showed economic growth slowed in the first quarter although not as sharply as initially thought. A surge in home building and steady inventory accumulation partially offset modest consumer spending and soft business investment.

Benchmark 10-year Treasury yields were up over 2 basis points to 1.849 percent, while two-year yields were up 4 basis points at 0.907 percent.

(Additional reporting by Richard Leong in New York; Editing by Catherine Evans and Nick Zieminski)