* Global stocks, emerging markets fall
* Focus shifts to impact of weak commodity prices
* Oil heads for third straight week of losses
By John Geddie
LONDON, Dec 18 (Reuters) - Investors turned cautious on
Friday about what a stronger dollar and weak commodity prices
could mean for the world economy, as a clutch of central banks
moved to cushion the impact of the first U.S. rate rise in
nearly a decade.
Initial relief after the U.S. Federal Reserve enacted a
long-expected hike on Wednesday started to fade, as falls in
global stocks and emerging markets showed that the move might
not pass off as smoothly as hoped.
The dollar sagged slightly on Friday but remained on track
to record its strongest week since early November. .DXY
European shares fell back from a one-week high reached in
the previous session, taking their cue from earlier slips in
Asia and on Wall Street, as oil prices headed for their third
consecutive week of losses.
The pan-European FTSEurofirst 300 index .FTEU3 , which had
risen 1.3 percent on Thursday, fell 0.6 percent.
"I am still quite bearish about the prospects for the first
quarter of next year. The oil price problems are not going away
any time soon," said Terry Torrison, managing director at
Monaco-based McLaren Securities.
Debt markets built on gains made on Thursday, with bets that
the Fed will make fewer rate rises next year than it is
currently projecting, reflecting bigger concerns about the
economy and doubts about significant inflation. GVD/EUR
In Europe, Spanish bonds lagged in a broad rally on Friday
ahead of an uncertain national election, with the country's
traditional system of two-party dominance facing an
unprecedented challenge from populist movements.
STIMULUS MOVES
The Bank of Japan on Friday bolstered its massive stimulus
programme to try to counter the impact of the Fed move, setting
up a new programme to buy exchange-traded funds, extend the
maturity of bonds it owns to around 12 years, and increase
purchases of risky assets.
In Taiwan, the central bank unexpectedly cut interest rates
for the second time this year.
"The global macro dynamics from the beginning of a Fed rate
hiking cycle are slowly playing out across the world," Angus
Nicholson, market analyst at IG in Melbourne, said in a note to
clients.
"In the direct wake of the decision we have seen some
dramatic moves in central bank policy with Taiwan cutting its
benchmark interest rate, Hong Kong and Mexico both hiking rates,
and Argentina removing currency controls and devaluing the peso
by 30 percent."
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was down 0.5 percent, but still on track to
finish the week up 1.5 percent. Emerging market stocks .MSCIEF
fell 0.8 percent, erasing nearly all of the 1 percent gain
booked on Thursday.
Against a basket of other major currencies, the dollar was
up 1.5 percent, on track for its best week in five though it
took a slight knock on Friday. .DXY
The greenback sank 1.1 percent against the Japanese currency
to 121.16 yen JPY= , while it was broadly flat against the euro
EUR= .
Wall Street drooped on Thursday as crude oil futures
continued to wallow at multi-year lows against a backdrop of
oversupply as well as a stronger dollar following the U.S.
Federal Reserve's widely anticipated tightening.
U.S. crude futures CLc1 were near the lowest levels since
2009 on Friday at $34.98 a barrel, while Brent crude LCOc1
edged up slightly to $37.25 but was headed to record its third
week of losses.
Gold edged up slightly from Thursday, when it suffered its
biggest slide in five months.
Spot gold XAU= rose 0.4 percent, after tumbling 2 percent
on Thursday, and is down 1.7 percent for the week.