GLOBAL MARKETS-Shares fall on U.S. GDP data; dollar pares losses after Fed

* U.S. first-quarter GDP data lowest in a year

* Fed points to softer U.S. labor market, weak growth

* Disappointing corporate results hit European shares

* Dollar hits roughly 9-week low, pares losses after Fed statement

* U.S. benchmark yields spike to highest in over six weeks (Updates to close of U.S. trading)

By Sam Forgione

NEW YORK, April 29 (Reuters) - Stock markets worldwide fell on Wednesday after weak corporate results and data showing U.S. economic growth braked more sharply than expected in the first quarter, while the dollar pared losses after a Federal Reserve policy statement.

Commerce Department data showed U.S. gross domestic product expanded at an only 0.2 percent annual rate, marking the weakest reading in a year and depressing U.S. shares.

The data hit European shares, which also suffered from weak corporate results from companies such as Delhaize and Norsk Hydro (LSE: NHY.L - news) . The FTSEurofirst 300 index of top regional shares posted its biggest daily decline since early January.

"The GDP data kind of encapsulates what's been on the market's mind, which has been the slowdown in sales and pressure on earnings in the first quarter," said Alan Gayle, director of asset allocation at RidgeWorth Investments in Atlanta (BSE: ATLANTA.BO - news) . "We're going through a soft period."

A stronger euro also weighed on European stock markets, with the currency hitting an eight-week high against the U.S. dollar at $1.11880. The dollar index, which measures the greenback against a basket of six major currencies, hit a roughly nine-week low of 94.678 after the GDP data.

The dollar pared losses after the Fed's latest statement on monetary policy. While the Fed showed signs that it was struggling to proceed with plans to raise interest rates this year, the central bank acknowledged slow economic growth during the winter months in part reflected "transitory factors," which supported the dollar.

The Dow Jones industrial average closed down 74.61 points, or 0.41 percent, at 18,035.53. The S&P 500 closed down 7.91 points, or 0.37 percent, at 2,106.85. The Nasdaq Composite closed down 31.78 points, or 0.63 percent, at 5,023.64.

MSCI (NYSE: MSCI - news) 's all-country world equity index was last down 2.44 points or 0.55 percent, at 440.19.

Europe's FTSEurofirst 300 index closed down 2.24 percent at 1,581.94.

Oil prices hit their highest of the year after the first crude stock draw in five months at the U.S. Cushing, Oklahoma hub suggested an oil glut may be starting to ease. Brent crude settled up $1.20 at $65.84 a barrel after hitting a high of $66.72. U.S. crude settled up $1.52 at $58.58 a barrel after hitting a high of $59.33.

Safe-haven U.S. government bond yields remained up after the Fed statement, but were off earlier highs, when a global bond sell-off led to a spike in yields. Benchmark 10-year yields were last at 2.05 percent after hitting 2.08 percent earlier in the session, the highest since March 16.

The rise in U.S. yields came as German 10-year yields hit their highest since March 17 at 0.291 percent after threatening to fall below zero earlier this month.

"A lot of the action was driven by the sell-off in European bonds," said Kathy Jones, fixed-income strategist at Charles Schwab in New York.

U.S. gold futures for June delivery settled down $3.90 at $1,210.00 an ounce. (Reporting by Sam Forgione; Additional reporting by Jamie McGeever in London and Gertrude Chavez-Dreyfuss and Richard Leong in New York; Editing by Meredith Mazzilli and Nick Zieminski)