GLOBAL MARKETS-Dollar gains, U.S. stocks fall as Fed shakes 'complacent' markets

(Adds settled oil prices; updates Treasuries, currency data)

* Yellen, Fischer comments on rate hike hit Wall Street

* Dollar gains vs yen, euro

* Yellen tone seen slightly hawkish, but no timeline given

* Treasury prices extend losses

By Hilary Russ

NEW YORK, Aug 26 (Reuters) - U.S (Other OTC: UBGXF - news) . stocks gave up early gains in choppy trading on Friday, hurt by a surging U.S. dollar as investors grappled with the possible timing of an interest rate hike after comments from several Federal Reserve officials, including Chair Janet Yellen.

European stocks advanced, however, while oil steadied in a volatile session and Treasury prices fell as investors across asset classes parsed the details of Yellen's presentation, markets' central focus of the week.

"The Fed served notice that a rate hike is still a possibility this year, and the markets had gotten a little complacent," said Anthony Valeri, investment strategist for LPL Financial in San Diego. "You're seeing the Treasury market and stocks have an adjustment."

In her much-awaited speech at an international gathering of central bankers in Jackson Hole, Wyoming, Yellen did not indicate when the Fed might hike rates. But her comments reinforced the view that such a move could come later this year.

The Fed has policy meetings scheduled in September, November and December.

The dollar rallied quickly off Yellen comments that were perceived as hawkish, said Minh Trang, senior FX trader at Silicon Valley Bank in Santa Clara, California.

"The overall takeaway, not just from Yellen but for the week, is that all the Fed officials - the voter and no-voter alike - have all taken a hawkish bent. The only downside I see is that there are only three meetings left this year and time is running out. Given the Fed's history, it's difficult to see them hiking more than once this year."

In a mid-day interview on CNBC, the Fed's No. 2 policymaker, Vice Chair Stanley Fischer, suggested that rate hikes were on track for this year. U.S. stocks, which had been higher, then fell.

The odds of a hike in September climbed to 30 percent from 21 percent on Thursday, according to CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch tool. Traders were pricing in a 60.2 percent chance of a hike in December, up from 51.8 percent on Thursday.

The Dow Jones industrial average fell 101.63 points, or 0.55 percent, to 18,346.78, the S&P 500 lost 10.88 points, or 0.5 percent, to 2,161.59 and the Nasdaq Composite dropped 16.22 points, or 0.31 percent, to 5,195.98.

The greenback hit a 10-day peak against the euro and 2-week high against the yen and Swiss franc . The dollar was last up 0.75 percent at $95.492 versus a basket of major currencies.

Oil prices seemed to stabilize despite reports of Yemeni missiles hitting Saudi Arabia's oil facilities.

Brent crude futures were 8 cents higher at $49.75 a barrel. U.S. crude oil futures settled up 31 cents at $47.64 per barrel.

European stocks closed higher, with a late boost from Yellen's remarks. The pan-European STOXX 600 closed up 0.5 percent.

Euro zone government bond yields, including Germany's 10-year bond, fell.

U.S. Treasuries slumped as investors evaluated whether the Fed is likely to raise rates in September. The price of benchmark 10-year notes fell, lifting yields to 1.63 percent. (Additional reporting by Dhara Ranasinghe and Abhinav Ramnarayan in London, Jason Lange and Ann Saphir in Jackson Hole, Chuck Mikolajczak, Gertrude Chavez-Dreyfuss, Jonathan Spicer, Karen Brettell and Devika Krishna Kumar in New York; Editing by Nick Zieminski and Dan Grebler; For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets)