* Dollar hits 8-month high on Fed comments, election odds
* ECB policy comments put pressure on euro
* Global equities lower but set for first weekly gain since Sept.
* Yuan hits 6-year low, weighs on emerging markets (Updates to U.S. market open, new throughout)
By Dion Rabouin
NEW YORK, Oct 21 (Reuters) - The dollar rose to its highest since February against a basket of currencies on Friday as investors weighed the likelihood of higher U.S. interest rates, while a measure of world stocks dipped but looked set for its first weekly gain in four weeks.
The euro EUR= hit a seven-month low against the dollar after the European Central Bank left its ultra-loose policy unchanged on Thursday but kept the door open to more stimulus in December. dollar .DXY also was bolstered by comments from New York Federal Reserve President William Dudley earlier this week that the Fed was prepared to raise U.S. overnight interest rates, and by decreasing likelihood of Donald Trump winning the U.S. presidency.
"There have been some Fed comments where they sound like they are ready to move in December, but also partly related is the market view that a hike in December is much more likely if Clinton wins than if Trump wins," said Steven Englander, global head of foreign exchange strategy at Citigroup (NYSE:C) in New York.
A Trump victory is seen as more likely to create uncertainty and market volatility, which could delay an interest rate increase.
Traders are now pricing in a 74-percent chance the Fed will raise rates in December, up from 64 percent two weeks ago, according to CME Group's FedWatch Tool.
China's offshore yuan CNH=D3 fell to its lowest against the dollar in six years, pressuring the currencies and equity shares of emerging market countries that rely on exporting to the world's second largest economy. Street moved lower despite Microsoft MSFT.O surging to an all-time high. GE's GE.N shares were off 2.3 percent, weighing the most on the S&P 500, after the conglomerate lowered its full-year revenue growth target and narrowed its profit forecast. earnings have been coming in mixed, GE's comments of a sluggish economy is causing investors to take a step back," said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.
The Dow Jones industrial average .DJI fell 108.37 points, or 0.6 percent, to 18,053.98, the S&P 500 .SPX lost 7.43 points, or 0.35 percent, to 2,133.91 and the Nasdaq Composite .IXIC dropped 2.81 points, or 0.05 percent, to 5,239.02.
World stocks slipped with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS down 0.4 percent and the pan-European STOXX 600 index edging 0.14 percent lower. World stocks, as measured by MSCI's world index .WORLD , were still on track for their first week of gains since September.
Longer-dated U.S. Treasury yields fell in step with their European counterparts, pushing both yield curves to their flattest level in a week, in the wake of Draghi's comments about bond purchases. basically told people they could play in the long end," said Tom di Galoma, managing director at Seaport Global Holdings in New York.
Oil prices rose modestly but were set for their first weekly loss since mid-September. Brent crude futures LCOc1 rose 0.6 percent while U.S. WTI crude futures CLc1 added 0.2 percent.