* Euro on back foot ahead of ECB policy meeting
* European stocks up 0.4 percent, bond yields nudge up
* Dollar near 12-1/2-year high after Fed hike talk
* Precious and industrial metals languish
By Marc Jones
LONDON, Dec 3 (Reuters) - Investors were hoping for another bit of Mario Draghi magic on Thursday, after risk assets were left bruised by comments from the head of the Federal Reserve that she was "looking forward" to hiking U.S. rates.
European stocks .FTEU3 were 0.4 percent higher and the euro EUR= was hovering near a 7-1/2-year low with Draghi expected to expand the European Central Bank's money printing programme later and cut its deposit rate again.
It followed a fresh spurt by the dollar .DXY overnight that had sent gold XAU= to a new 5-1/2-year low and other commodity and emerging markets .MSCIEF tumbling again.
The move had been triggered by Fed head Janet Yellen who had said on Wednesday that raising U.S. rates, something it is expected to do for the first time in nearly a decade on Dec. 16, would be proof of the economy's recovery.
"When the Committee begins to normalize the stance of policy, doing so will be a testament ... to how far our economy has come," she said, referring to the Fed's policy-setting committee. "In that sense, it is a day that I expect we all are looking forward to."
It left the focus firmly on the ECB's moves later and traders wondering whether whatever comes out of Frankfurt will be able to offset the impact of higher Fed interest rates, which tend to drive borrowing costs globally.
"Draghi is going to have to keep doing what he can," said Didier Saint-Georges, managing director of fund manager Carmignac.
"But the impact of central banks is meeting the wall of diminishing returns... so he will have to do more and more and more and even then it won't have the same effect."
The ECB will announce its decision on rates at 1245 GMT and any new bond buying plans at its 1330 GMT news conference.
Money markets are pricing in a cut of at least 10 basis points in the ECB deposit rate to minus 30 basis points, while economists in a Reuters poll expect an increase in asset buying to 75 billion euros a month from 60 billion euros.
Short-term German yields were pinned near record lows in deep negative territory as the expectations mounted. Longer-dated 10-year yields were marginally higher across the region though having been dragged up by Yellen and U.S. yields.
COMMODITIES CRUNCHED
The euro fell 0.6 percent to $1.0553 EUR= , while the dollar index .DXY , which measures the greenback against 6 top world currencies, was hovering just below a 12-1/2-year high of 100.51 .DXY it had hit overnight.
In Asia, shares had been under pressure after a sharp fall on Wall Street on Tuesday. MSCI's main regional index ex Japan .MIAPJ0000PUS fell 0.4 percent as Tokyo's Nikkei .N225 also ending flat. .T
Australian shares .AXJO fell 0.6 percent and South Korea's Kospi .KS11 shed 1 percent. Shares in Hong Kong, Malaysia and Singapore also declined although Shanghai .CSI300 brushed off disappointing services sector data to close 0.7 percent higher.
In commodities, crude oil bounced modestly on bargain hunting following its tumble overnight prompted by surging U.S. stockpiles and the stronger dollar.
U.S. crude CLc1 was up 1.2 percent at $40.43 a barrel after dropping 4 percent overnight. Crude was still capped with OPEC widely expected not to opt for a production cut at Friday's meeting despite a global supply glut.
Industrial metals also remained under pressure amid global oversupply and shrinking Chinese demand, with spot iron ore prices plumbing 10-year lows this week.
Copper on the London Metal Exchange CMCU3 was down 0.5 percent at $4,540.50 a tonne as it edged back towards a 6-year low as this week's pleas for Chinese government intervention providing little tonic. (Additional Reporting by Shinichi Saoshiro in Tokyo; Editing by Toby Chopra)