* Fed to hold rates near zero long after economy strengthens
* Yellen remarks hint rate hikes sooner than expected
* Gold falls as dollar gains after Fed statement (Updates with U.S. markets close)
By Angela Moon
NEW YORK, March 19 (Reuters) - Global equity markets ended lower on Wednesday while yields on U.S. Treasuries jumped after comments by U.S. Federal Reserve Chair Janet Yellen raised the possibility that interest rates could rise soon than has been expected.
Yellen, speaking at her first press conference as the Fed chief after the close of the U.S. central bank's two-day policy meeting, said the Fed could start to raise interest rates around six months after its current asset purchase program ends.
Yellen said the bond purchases would probably end in the fall; a rate reduction six months later would move up the timetable for the Fed's first hike, which many market participants had been expecting in the second half of 2015.
"She certainly moved it up a little bit and I don't think the market was expecting that at all because she is widely viewed as being more on the dovish side of the aisle than she is on the hawkish side," said Peter Kenny, chief executive officer of Clearpool Group in New York.
"That is not a particularly hawkish comment, but the fact of the matter is it was not expected."
Fears that the Fed's policy-setting Federal Open Market Committee might move away from its near-zero rate policy sooner than some traders had previously thought unleashed a wave of selling in the bond market. Short-dated and intermediate Treasuries suffered the biggest losses since they are seen as the most vulnerable to a swifter change in Fed policy.
Benchmark 10-year Treasuries notes last traded 26/32 lower in price to yield 2.773 percent, up 9 basis points from late on Tuesday.
The five-year note suffered the heaviest losses among all maturities. It tumbled 25/32 in price with its yield surging 16 basis points, the largest one-day rise since July 2013, to 1.712 percent.
The dollar index gained 0.8 percent 80.056. Gold fell 1.8 percent to $1,330.61 an ounce, its biggest one-day fall since Jan. 30. Gold has lost nearly 4 percent in the metal's biggest three-day drop since Dec. 19.
"Gold's appeal as an inflation hedge is not as strong after the Fed's moves. It was already down on the reduction in geopolitical risk, so the combination of the two is pretty powerful," said James Steel, chief precious metals analyst at HSBC.
WALL ST SPOOKED
U.S. stocks sank in a late afternoon selloff that sent major indexes down more than 1 percent, but managed to finish off their session lows.
The Dow Jones industrial average fell 114.02 points, or 0.7 percent, to 16,222.17, the S&P 500 lost 11.48 points, or 0.61 percent, to 1,860.77, and the Nasdaq Composite dropped 25.711 points, or 0.59 percent, to 4,307.602.
Equities had rallied at the start the week, buoyed by easing geopolitical concerns, though trading volume has been light. The S&P 500 climbed 1.7 percent over Monday and Tuesday, its best back-to-back performance since early February.
The MSCI world equity index which tracks shares in 45 countries, fell 0.4 percent.
European markets closed ahead of the Fed's policy statement and Yellen's press conference. The FTSEurofirst 300 edged down 0.07 percent, at 1,305.14 points, while the euro zone's blue-chip Euro STOXX 50 index was up 0.08 percent at 3,076.36 points.
Brent oil futures fell as worries over sanctions affecting Russian oil supplies eased, while U.S. crude oil rose on an inventory draw at the benchmark's pricing hub and ahead of the front month contract's expiration.
Brent settled 94 cents lower at $105.85 per barrel after falling by $1.08 to an intra-day low of $105.71 per barrel, the lowest since Feb. 5.
(Editing by Leslie Adler)