* U.S. dollar adds to gains after Yellen comments
* U.S. stocks trim gains after Yellen speech
(Updates with reaction to Yellen remarks, adds European shares'
close)
By Saqib Iqbal Ahmed and Caroline Valetkevitch
NEW YORK, May 27 (Reuters) - The U.S. dollar added to gains
while U.S. Treasury yields hit session highs on Friday after
Federal Reserve Chair Janet Yellen said a U.S. interest rate
hike will likely be appropriate in the coming months.
U.S. stocks pared their advance.
"It's appropriate ... for the Fed to gradually and
cautiously increase our overnight interest rate over time, and
probably in the coming months such a move would be appropriate,"
Yellen told an audience of Harvard University professors and
alumni.
Numerous Fed officials in recent weeks have talked up
expectations that an increase in borrowing costs may be near.
After Yellen's speech, traders raised their expectations of a
June rate hike to 34 percent from 30 percent, according to CME
Group.
"People think June or July are very much alive now," said
Stephen Massocca, chief investment officer at Wedbush Equity
Management LLC in San Francisco.
"That epiphany took place days ago when the Fed minutes were
released and so it's consistent with that. I don't think there
was anything in here that was new news," he said.
On Wall Street, the Dow Jones industrial average .DJI was
up 5.75 points, or 0.03 percent, to 17,834.04, the S&P 500
.SPX gained 2.75 points, or 0.13 percent, to 2,092.85 and the
Nasdaq Composite .IXIC added 14.40 points, or 0.29 percent, to
4,916.17.
MSCI's all-country world stock index .MIWD00000PUS was
last up 0.1 percent. The pan-European FTSEurofirst 300 index
.FTEU3 of leading regional stocks closed up 0.2 percent.
The dollar index .DXY was up 0.50 percent and on track
for its strongest monthly performance since November.
Also boosting the dollar, U.S. data earlier on Friday showed
economic growth slowed in the first quarter although not as
sharply as initially thought. A surge in home building and
steady inventory accumulation partially offset modest consumer
spending and soft business investment.
Benchmark 10-year Treasury yields US10YT=RR were up over 2
basis points to 1.849 percent, while two-year yields US2YT=RR
were up 4 basis points at 0.907 percent.