* Asian shares weaker but outperform Wall Street
* Kospi hits 3-month highs
* Fed sees 5 more rate hikes by 2020, above neutral levels
* Dollar mixed, emerging market currencies gain
* European shares seen falling 0.1-0.3 pct
By Hideyuki Sano
TOKYO, Sept 27 (Reuters) - Global shares struggled in volatile trade on Thursday with Asian markets giving up earlier gains after the Federal Reserve raised interest rates and affirmed plans for more policy tightening through to 2020.
European shares are expected to open slightly weaker, with financial spread-betters seeing Germany's DAX .GDAXI falling 0.3 percent and Britain's FTSE .FTSE and France's CAC .FCHI 0.1 percent.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.1 percent, reversing from an 0.3 percent gain earlier in the session. There were, however, pockets of resilience such as South Korea's Kospi .KS11 , which hit three-month highs, as it resumed trade after a three-day public holiday.
Japan's Nikkei .N225 briefly touched an eight-month high as automakers rose after the United States indicated it would not impose further tariffs on Japanese automotive products for now, though it ended down 1.0 percent.
Asia generally fared better than Wall Street, where the Dow Jones Industrial Average .DJI fell 0.4 percent and the S&P 500 .SPX lost 0.33 percent. The Nasdaq Composite .IXIC dropped 0.21 percent.
The 10-year U.S. Treasuries yield US10YT=RR fell to 3.043 percent, from Tuesday's four-month high of 3.113 percent as market participants braced for a more hawkish stance.
The fall in Treasury yields was good news for Asia and other emerging markets, which had been pressured by concerns that higher U.S. yields would encourage investors to move funds out of emerging markets to the United States, on top of worries over the Sino-U.S. trade feud.
The Fed bumped up its policy target by a quarter of a percentage point to 2.00-2.25 percent and indicated that it foresees another rate rise in December, three more next year, and one in 2020.
BEYOND NEUTRAL LEVELS?
While that forecast was little changed from June, the Fed's projected hikes will put the benchmark overnight lending rate at 3.4 percent by 2020, roughly half a percentage point above the Fed's estimated "neutral" rate of interest. Fed seems to have grown more convinced of the need to keep raising rates beyond neutral levels. I cannot see reasons to slow down raising rates as long as the jobless rate keeps falling," said Tomoaki Shishido, fixed income strategist at Nomura Securities.
The Fed also dropped a reference in its statement to the word "accommodative", although Chairman Jerome Powell later said policy was still accommodative.
He also said the Fed didn't have any precise understanding of when policy would be neutral, suggesting Powell himself may not be attaching major importance to the Fed's median estimate of the neutral rate of 2.9 percent.
Yet Some investors see limited need for the Fed to keep raising rates as inflation shows no signs of picking up, despite continued economic growth and the jobless rate near a two-decade low.
"Three hikes next year is absurd," said Bob Baur, chief global economist at Principal Global Investors in Des Moines, Iowa.
"With an additional rate hike likely in 2018 and one in March next year, we will reach what many Fed governors feel is a neutral rate level. With the low odds of a spike in inflation, it makes sense that the Fed would pause after the March rate hike and allow the markets to adjust to its new policy," he said.
Adding more uncertainty to the economic outlook were trade disputes between the Trump administration and several trading partners.
U.S. tariffs and retaliatory levies by others could slow the global economic growth, but broad-based tariffs could also stoke inflation by raising the prices of imported goods.
A boost to the U.S. economy from Trump's tax cuts looks set to wane next year, raising more doubts on the view that the U.S. economy could retain strength beyond next year.
Indeed, the European Central Bank said on Wednesday the United States would have the most to lose if it started a trade war with other countries, while China would be better off after retaliating. stock markets have been also paring earlier expectations that the U.S. will win its trade wars, with shares outside the United States starting to outperform since the middle of this month.
In the currency market, the dollar gained a tad after the Fed's decision.
The dollar index against a basket of six major currencies .DXY stood at 94.529, extending its recovery from Friday's 2-1/2-month low of 93.808.
The euro traded at $1.1704 EUR= , down 0.3 percent and off a three-month high of $1.18155 touched on Monday.
The yen JPY= hit a 10-week low of 113.145 to the dollar in a choppy trade after the Fed's policy announcement but it bounced back to 112.64.
Emerging market currencies were firmer, with MSCI's emerging market currency index .MIEM00000CUS rising 0.2 percent on Wednesday and another 0.2 percent in Asia on Thursday.
These gains have sent up the index by 0.25 percent, raising hopes it could post its first monthly rise in six months.
Oil prices gained on an impending fall in Iranian exports due to U.S. sanctions, which are set to be implemented in November.
Global benchmark Brent LCOc1 rose 1.1 percent to $82.22 per barrel, near the four-year high of $82.55 set on Tuesday. West Texas Intermediate (WTI) crude CLc1 futures gained 1.3 percent to $72.47 a barrel.
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