* Fed's growth warning hits European, US stocks
* Emerging markets welcome lack of change
* 2016 "liftoff" now possible
By Jamie McGeever
LONDON, June 18 (Reuters) - European stocks fell on Friday and bonds rose, pushing yields sharply lower, after the U.S. Federal Reserve cited weakening global growth and the recent upsurge in financial market volatility as its reasons for not raising interest rates.
Stocks and currencies in emerging markets, however, which are more vulnerable to higher U.S. interest rates, welcomed the Fed's decision on Thursday to postpone "lift off" for at least another month, and rose across the board.
The FTSEuroFirst index of leading 300 shares fell 0.8 percent in early trade to 1,413 points .FTEU3 , Germany's DAX fell 1 percent to 10,129 points .GDAXI , and France's CAC 40 was down 0.9 percent at 4,615 points .FCHI .
Britain's FTSE 100 index .FTSE also followed Wall Street's overnight lead, and was down 0.3 percent at 6,170 points. U.S. futures pointed to a steady open later on Friday.
European government bond yields tumbled, tracking the 2-year U.S. Treasury yield's biggest fall since Treasuries were first included in the Fed's quantitative easing bond-buying stimulus programme in March 2009.
The 10-year German Bund yield was down 10 basis points in early trading EU10YT=RR , on course for the biggest one-day fall since early July and the third biggest this year.
A growing number of economists, including those at Morgan Stanley (NYSE:MS) and Barclays (LONDON:BARC), are now wondering whether the Fed will raise rates at all this year, given its concerns over growth and market volatility, as well as the strength of the dollar.
"Now it's a waiting game again and every upcoming meeting is on the table so long as data and conditions can justify a move. However, there is no guarantee that the conditions will be satisfactory ahead of the end of 2015," said Lee Ferridge at State Street.
Fed Chair Janet Yellen said the global outlook has appeared to become less certain, adding that recent falls in U.S. stock prices and a rise in the value of the dollar already were tightening U.S. financial market conditions. ID:nL1N11N244
The Fed's fresh economic projections showed 13 of 17 policymakers still foresee at least one rate hike in 2015, down only slightly from 15 at the last forecast made in June. But it also trimmed its forecasts for 2016 and 2017 economic growth.
RE-EMERGING MARKETS
Earlier in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1 percent to a four-week high. It was the index's third consecutive daily increase, something not seen since early July.
Yellen explicitly noted the central bank was focusing on the slowdown in China and emerging markets, saying one key issue is whether there might be a risk of a more abrupt slowdown in China.
A sudden devaluation of the yuan by the People's Bank of China's last month surprised global markets and stoked worries that its economy may be in worse shape than previously thought.
A Barclays survey of more than 700 global investors published this week showed that most believed Chinese growth figures are overstated, with more than half of those saying by as much as two full percentage points.
"Yellen made clear that pending (Fed) meetings remain 'live' but the repeated references to 'international developments' made clear that the Fed is likely to remain cautious," RBS (LONDON:RBS) rates strategists said in a note to clients on Friday.
Emerging market equities rose to one-month highs on Friday, with MSCI's broadest emerging market index .MSCIEF up 0.6 percent and on track for the biggest weekly rise since early April, with 3.7 percent gains.
However, Japan's Nikkei average .N225 , in line with other developed equity markets, ended three days of gains to close 2 percent lower.
In currencies, the dollar was still on the defensive, having fallen more than 1 percent immediately after the Fed's decision. The dollar index against a basket of major currencies .DXY was down a quarter of one percent to a three-week low of 94.301 on Friday.
The euro was steady at $1.1435 EUR= in early European trade on Friday, near a three-week high of $1.1441 hit on Thursday. The dollar fell 0.5 percent against the yen to 119.40 yen JPY= .
U.S. debt yields remained under downward pressure, with the two-year note's yield slipping further to 0.667 percent, only a day after it hit a 4 1/2-year high of 0.819 percent.
In commodities, U.S. crude futures CLc1 were down 0.7 percent at $46.54 per barrel, but still up more than 4 percent on the week. Brent was steady at $49.15 a barrel LCOc1 .
Gold took heart from the dollar's travails XAU= and hit a two-week high of $1,136 per ounce. It last stood at $1,131.80.