(Updates at 3:35 p.m. EST)
* Wall Street rallies as Euro STOXX 600 falls 0.2%
* Dollar gains as appetite for riskier currencies diminishes
* Treasury yields slip as investors weigh Fed commentary
NEW YORK, Nov 7 (Reuters) - The dollar gained and world shares pared losses on Tuesday, as stocks on Wall Street surged and investors assessed Federal Reserve commentary about a too-strong U.S. economy that could require another interest rate hike to tame inflation.
Gold hit a two-week low as the safe-haven rally triggered by Mideast tensions ebbed and oil prices hit 2-1/2-month lows as mixed economic data from China offset the impact of Saudi Arabia and Russia extending output cuts.
Treasury yields fell as other Fed officials speaking on Tuesday suggested the U.S. central bank could be near the end of its tightening cycle, helping U.S. equity indexes to rise, with the Nasdaq up about 1% as large-cap growth stocks surged.
But Fed Governor Christopher Waller said "blowout" third-quarter U.S. economic growth at an annualized 4.9% rate warrants watching as the U.S. central bank considers its next policy moves, leading a colleague to explicitly call for another hike.
Fed Governor Michelle Bowman said she took the recent GDP number as evidence the U.S. economy not only "remained strong," but may have gained speed and require a higher Fed policy rate.
"We're in for a much longer cycle of higher rates than the most bullish people are expecting," said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey. "Inflation is something that we've learned is hard to tamp down once it really gets going."
But Meckler said the bigger investor concern is whether there will be a meaningful U.S. recession or not, a reason why investors are buying large-cap tech stocks with "iron balance sheets and the predictable cash flows," as they're seen as the least likely to be hurt in a recessionary environment.
The Nasdaq Composite advanced 1.07%, the S&P 500 gained 0.42% and the Dow Jones Industrial Average rose 0.26%.
But MSCI's gauge of global stock performance shed 0.05%, while the pan-European STOXX 600 index lost 0.16%.
The dollar advanced as last week's rally in riskier currencies took a breather, gaining on the euro after a larger-than-expected fall in German industrial production in September.
"The dollar on a broad basis is still quite strong," said Brad Bechtel, global head of FX at Jefferies in New York. "The economy's going to hold in there, and then we get these dovish pendulum swings back the other way, which is where we're at now."
Against a basket of currencies, the dollar index rose 0.25% to 105.51, with the euro down 0.2% to $1.0694.
The euro and most other currencies gained sharply on the dollar last week after various data - most notably a U.S. labor report that showed job growth slowed in October.
Currency traders were also focused on the Australian dollar, which fell about 1.1% to $0.642 after the Reserve Bank of Australia announced a 25 basis point hike, as expected, taking the cash rate to a 12-year high of 4.35%.
But the central bank softened its language on the necessity of any further action.
Treasury yields slipped ahead of large bond auctions this week. U.S. benchmark 10-year yields have dropped in five of the last six sessions, and 30-year yields in four of the last five.
The two-year's yield, which reflects interest rate expectations, fell 2.8 basis points to 4.913%, while the 10-year slipped 8.7 basis points at 4.575%.
Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan slipped 1.2%, snapping three straight days of gains.
In China, data showed imports unexpectedly grew in October, while exports contracted faster than expected, in a mixed set of indicators that showed the recovery in the world's second-largest economy remains uneven.
Hong Kong's Hang Seng fell 1.7%, while mainland China blue chips fell 0.4%.
Crude oil fell more than 4%, with U.S. crude sliding $3.45 to settle at $77.37 a barrel and Brent falling $3.57 to settle at $81.61.
U.S. gold futures settled down 0.8% at $1,973.50 an ounce.
(Reporting by Tom Wilson in London and Tom Westbrook in Singapore; Additional reporting by Ankur Banerjee in Singapore; Editing by Lincoln Feast, Kim Coghill, Christina Fincher and Jonathan Oatis)
