* Dollar jumps after Fed signals steady increases
* Wall Street to follow European, Asian shares lower
* U.S., European bond yields hit multi-week highs
* Euro stages tentative recovery as ECB meets
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh (Updates prices)
By John Geddie
LONDON, Jan 19 (Reuters) - The dollar bounced back, Asian and European shares slipped and government bond yields soared to multi-week highs on Thursday after U.S. central bank chief Janet Yellen signalled a path of steady interest rate increases for the world's largest economy.
The European Central Bank was set to meet as the euro recovered some of the ground it lost overnight EUR= against the greenback, but with no policy changes expected.
Further hints of disagreements among the region's monetary guardians -- revealed in minutes of the ECB's December meeting -- could ruffle markets however.
European .STOXX and Asian stocks .MIAPJ0000PUS broadly dipped, with resources and oil companies hit as a rising dollar increased the cost of dollar-denominated commodities for holders of foreign currencies. .EU
But there were some big individual gains as Zodiac Aerospace ZODC.PA surged following a takeover offer, and Moneysupermarket.com MONY.L jumped after it reported strong results.
Wall Street was set to open a touch lower with the S&P 500 .SPX set to give up some of Wednesday's rise, which was led by stronger financial stocks.
The U.S. currency recovered from Tuesday's decline, when it reached its weakest level since early December after President-elect Donald Trump expressed concern in a weekend interview about the effects of a stronger greenback.
Yellen will speak again later on Thursday, after European markets close, about the economic outlook and monetary policy.
"Of all the speakers we're getting, either from Davos or from less ostentatious spots, the one I'm going to listen to most for now will probably still be Janet Yellen," Societe Generale (PA:SOGN)'s currency strategist Kit Juckes said.
"As the U.S. economy approaches full employment, as wages rise but inflation rises nearly as quickly, how hawkish the Fed dares to be will determine how much the dollar rises."
The dollar gained almost one percent from Wednesday's lows against a basket of currencies .DXY after Yellen's comments that she and other policymakers expected to raise rates a few times a year until 2019 affects appeared to be wearing off on Thursday, though, as investors, desperate for further details on Trump's plans to boost growth, remained cautious before the President-elect's inauguration on Friday.
Euro zone government bonds were still moving in the slipstream of Yellen's speech with benchmark German bond yields DE10YT=TWEB spiking to one-month highs after U.S. equivalents US10YT=RR rose to their highest since Jan. 9.
OIL REBOUND
Earlier in Asia, short-term funding costs in China shot to their highest in nearly 10 years on fears that liquidity was tightening heading into the Lunar New Year holidays at the end of this month market is typically short of liquidity ahead of the Lunar New Year," said Gu Weiyong, chief investment officer at bond-focused hedge fund Ucom Investment Co, adding that a cash injection by the central bank was insufficient.
Bucking the trend of weaker Asian shares, Japan's Nikkei stock index .N225 ended up 0.9 percent, helped by weaker yen JPY= .
The pound rebounded above $1.23 GBP=D4 on Thursday after a wild few Brexit-fuelled days that has seen both its biggest rise in decades against the dollar and two of its heaviest slumps in months. GBP/
U.S. crude CLc1 added 0.8 percent to $51.50 per barrel, after shedding 2.67 percent on Wednesday. Brent crude LCOc1 rose 0.9 percent to $54.39 after slipping 2.79 percent.
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