(Refiles to fix headline, Wrapup number to 6)
* Dollar starts week in positive territory
* Fed's Yellen may give rate hint on Friday
* Oil prices fall nearly 3 percent
By Hilary Russ
NEW YORK, Aug 22 (Reuters) - World stocks edged lower, U.S. Treasury yields fell and the U.S. dollar ticked up on Monday on expectations the Federal Reserve will give a signal this week that it is preparing to raise U.S. interest rates.
An upbeat assessment of the U.S. economy's strength from Fed Vice Chairman Stanley Fischer on Sunday was viewed as raising the prospect of Fed Chair Janet Yellen flagging a rate rise at a meeting with world central bankers on Friday. yields rose in overnight trading on Fischer's comments but fell back in early trading, with prices on 30-year bonds US30YT=RR rising more than 1 percentage point and yields falling to 2.24 percent. The price on 10-year notes US10YT-RR was last up 0.33 percent to yield 1.54 percent. Bond yields move inversely to prices.
The dollar index, which tracks the greenback against a basket of six major currencies, was last up 0.07 percent at 94.58 .DXY after falling about 1.3 percent last week. The euro turned slightly negative, losing .04 percent against the dollar at $1.1305 EUR= .
"Fischer didn't necessarily state when the Fed has decided to hike rates, but his remarks seemed to be alluding that a rate hike might be 'round the corner," said Craig Erlam, a senior market analyst at OANDA.
U.S. stocks zig-zagged in early trading, opening lower, regaining momentum to turn positive, then dropping again.
The Dow Jones industrial average .DJI fell 38.86 points, or 0.21 percent, to 18,513.71, the S&P 500 .SPX lost 4.21 points, or 0.19 percent, to 2,179.66 and the Nasdaq Composite .IXIC dropped 7.11 points, or 0.14 percent, to 5,231.27.
European stocks initially fell slightly .STOXX but recouped losses to rise 0.11 percent, having received a temporary boost in early trading after Syngenta's proposed takeover by ChemChina was approved by U.S. regulators. .EU
Oil prices fell nearly 3 percent as China ramped up exports of refined products, U.S. oil producers added rigs for an eighth straight week and prospects emerged for increased exports from Iraq and Nigeria. O/R
Brent crude futures LCOc1 were down 3.05 percent, or $1.55, to $49.33 a barrel, with U.S. West Texas Intermediate (WTI) crude CLc1 slipping $1.45, or 2.99 percent, to $47.07.
Because of the production and storage overhang in fuel markets, Barclays (LON:BARC) said this month's 20 percent price rally is unwarranted and that oil prices of $50 or higher are unsustainable.
"Oil prices will likely experience another short-term dip in the coming weeks," it added.
Investors are waiting for this week's gathering of central bankers in Jackson Hole, Wyoming, on Thursday, with Yellen due to speak the following day.
Interest rate futures contracts indicate that the market is pricing in about 50/50 odds of a U.S. rate increase by the end of the year.
Emerging stocks and currencies also fell broadly on Monday. MSCI's emerging equity index .MSCIEF slipped 0.6 percent to the lowest in a week.
Many emerging countries borrow heavily in U.S. dollars, meaning an appreciation in the greenback makes it more expensive for them to service their debt.
Gold fell on Monday to its lowest in two weeks on talk of possible U.S. rate hikes, before recovering slightly. gold XAU= was down 0.18 percent at $1,338.5 an ounce, having hit a low of 1,331.35 an ounce at one stage. GOL/
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