GLOBAL MARKETS-Stocks sell off, dollar gains as possible Fed hike weighed

* Fed minutes help revive prospects of a June rate hike

* NY Fed's Dudley says June is "live meeting"

* Dollar index hovers near 7-week high, pressures oil

* Global stock gauge falls for third straight day (Updates with opening of U.S (Other OTC: UBGXF - news) . markets; previous dateline London)

By Lewis Krauskopf

NEW YORK, May 19 (Reuters) - Stocks around the world sold off on Thursday, while the U.S. dollar gained, pressuring oil prices, as increased expectations that the Federal Reserve could raise interest rates in the near term rippled through financial markets.

Investors were adjusting to the minutes of the Fed April meeting, released on Wednesday, in which the U.S. central bank opened the door to a rate hike in June.

Speaking on Thursday, New York Fed President William Dudley said the Fed is on track for a U.S. rate hike in June or July.

"June is definitely a live meeting depending on how the data evolves," Dudley said.

Traders were projecting a 26-percent chance the Fed would raise rates in June, according to the CME FedWatch tool, nearly twice as high as they expected on Tuesday.

"The minutes of the FOMC meeting took the market by surprise, and there's what I'd call a moderate adjustment going on," said Alan Gayle, director of asset allocation at RidgeWorth Investments in Atlanta (BSE: ATLANTA.BO - news) . "The ripple effects from a quicker-than-expected rate hike from the Fed would be felt across most asset classes."

The Dow Jones industrial average was falling 191.51 points, or 1.09 percent, at 17,335.11, the S&P 500 was losing 21.44 points, or 1.05 percent, at 2,026.19 and the Nasdaq Composite was dropping 54.58 points, or 1.15 percent, at 4,684.54.

Wal-Mart's higher-than-expected quarterly profit gave some support to U.S. stocks and the beleaguered retail sector.

Financials, which tend to benefit in a rising rate environment, shed 1.4 percent after posting their best day in a month on Wednesday.

The pan-European FTSEurofirst 300 index was off 1.1 percent. European travel and leisure stocks fell 1.4 percent after EgyptAir jet carrying 66 passengers and crew from Paris to Cairo disappeared.

MSCI (NYSE: MSCI - news) 's gauge of global stocks dropped 1.2 percent, falling for a third straight session.

The global index is off more than 2 percent for 2016. Concerns about the global economy persist and investors are responding to diverging policies between the Federal Reserve and other major central banks.

Speaking on Thursday, Fed Vice Chairman Stanley Fischer said the United States requires faster potential economic growth in order to lift the long-run equilibrium interest rate.

The dollar rose 0.3 percent against a basket of currencies, adding to gains after hitting its highest point since late March on Wednesday.

Crude oil prices fell as the dollar's surge drove players from the oil market.

A stronger dollar makes commodities denominated in greenback more expensive for holders of other currencies.

U.S. crude fell 2.7 percent to $46.91 a barrel, while benchmark Brent dropped 2.8 percent to $47.54 a barrel.

Benchmark 10-year U.S. Treasuries rose 12/32 in price to yield 1.8435, down from 1.883 percent late on Wednesday.

Spot gold was down 0.6 percent, sliding to a three-week low.

(Additional reporting by Marc Jones in London, Editing by Catherine Evans and Nick Zieminski)