GLOBAL MARKETS-Wall St rebounds, dollar stalls as markets digest Fed's slowdown signal

*

U.S. stocks recover from steepest selloff in months

*

3Q U.S. GDP revised up to 3.1% from 2.8%

*

European, Asian stocks lower after Fed meeting

*

Dollar gives back some gains; gold rebounds

*

Benchmark Treasury yields hit highest since May

(Updates to U.S. morning trade)

By Stephen Culp

NEW YORK, Dec 19 (Reuters) - Wall Street rebounded and U.S. Treasury yields resumed their climb on Thursday as stocks recovered from their steep dive in the wake of the Federal Reserve's hawkish outlook.

The dollar gave back some of Wednesday's gains and gold rallied as investors grew accustomed to the reality that the central bank will take a slower, more measured approach to policy easing in the coming year.

The cautious note struck by the Fed's economic projections and the expected slowdown of rate cuts prompted the steepest U.S. stock selloff in months on Wednesday.

"People are trying to make sense of the market reaction to the Fed yesterday," said Thomas Martin, senior portfolio manager at Globalt in Atlanta. "Generally speaking, what happened at the Fed was good news; they're on the job on inflation, the economy is strong, the final GDP number of 3.1% ain't bad."

"The market has been strong all year - very, very strong, and people are skittish," Martin added. "Valuations are high. So it was an excuse to take some money off the table or try and take some profits."

Other central banks wrapped up an eventful year of rate decisions on Thursday, with the central banks of England, Japan, Norway and Australia holding firm, with Switzerland and Canada implementing cuts of 50 basis points. Sweden's Riksbank reduced its policy rate by 25 basis points, as did the European Central Bank last week.

On the economic front, an unexpected upward revision to third-quarter U.S. GDP, a dip in jobless claims and an upside surprise in existing home sales all underscored U.S. economic strength.

The Dow Jones Industrial Average rose 193.52 points, or 0.46%, to 42,521.17, the S&P 500 rose 27.73 points, or 0.47%, to 5,899.89 and the Nasdaq Composite rose 108.91 points, or 0.55%, to 19,501.60.

European stocks took a dive, setting a course for their biggest percentage drop in five weeks as the Fed's hawkish signal sent investors fleeing riskier assets.

MSCI's gauge of stocks across the globe fell 2.62 points, or 0.31%, to 842.82.

The STOXX 600 index fell 1.49%, while Europe's broad FTSEurofirst 300 index fell 30.87 points, or 1.51%.

Emerging market stocks fell 12.44 points, or 1.14%, to 1,082.87. MSCI's broadest index of Asia-Pacific shares outside Japan closed lower by 1.39%, at 572.98, while Japan's Nikkei fell 268.13 points, or 0.69%, to 38,813.58.

Yields on 10-year Treasuries jumped past 4.5% to the highest level since May in the face of the U.S. central bank's more measured approach to interest rate cuts in the coming year.

The yield on benchmark U.S. 10-year notes rose 5.4 basis points to 4.552%, from 4.498% late on Wednesday.

The 30-year bond yield rose 8.2 basis points to 4.7405% from 4.66% late on Wednesday.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 6.6 basis points to 4.289%, from 4.355% late on Wednesday.

The dollar's rally against a basket of world currencies stalled as the market digested the Fed's cooler approach to easing.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.02% to 108.24, with the euro up 0.28% at $1.0381.

Against the Japanese yen, the dollar strengthened 1.82% to 157.61.

Bitcoin staged a minor recovery after its steep sell-off in the aftermath of Wednesday's Fed decision.

In cryptocurrencies, bitcoin fell 0.40% to $100,523.00. Ethereum declined 2.24% to $3,606.76.

Oil gained ground, supported by a reduction in U.S. inventories, but its gains were capped by the Fed's slower rate cut forecasts, which could hinder economic growth and dampen demand.

U.S. crude fell 0.26% to $70.40 a barrel and Brent fell to $73.17 per barrel, down 0.3% on the day.

Gold bounced back from a one-month low, rising in opposition to the weaker dollar.

Spot gold rose 0.1% to $2,590.13 an ounce. U.S. gold futures fell 1.49% to $2,597.30 an ounce.

(Reporting by Stephen Culp in New York Additional reporting by Ankur Banerjee in Singapore and Alun John in London Editing by Matthew Lewis)