* Markets roiled by speculation Fed could hike sooner, faster
* U.S. Treasury yields jump, push dollar higher across the board
* Wall St slips, likely to pressure shares in Asia
By Wayne Cole
SYDNEY, March 20 (Reuters) - The U.S. dollar was holding hefty gains in Asia on Thursday as investors wrestled with the risk that U.S. interest rates could rise sooner and faster than previously thought, pressuring stock and bond prices.
Short-term U.S. bond yields jumped by the most in almost three years after Federal Reserve Chair Janet Yellen said the central bank might end its bond-buying program this fall, and could start to raise interest rates around six months later.
That combined with a slight rise in the projected path for rates by Fed members, led the market to bring forward the likely timing of the first hike in U.S. rates by a couple of months.
"The end result is a market that is left feeling less comfortable about the outlook for policy than before -- pricing in more risk of tightening sooner and faster -- despite the Fed's best efforts in stressing that their views about policy have not changed," said Michelle Girard, chief economist at RBS in Stamford, Connecticut.
The new sense of uncertainty unsettled Wall Street, where the Dow fell 0.7 percent, and the S&P 500 0.61 percent.
The early action in Asian stocks was muted with the Australian market off just 0.2 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.3 percent.
The futures market for the Fed funds rate <0#FF:> shifted to pricing in around a 50-50 chance of the first hike in May to June next year. The timing had been July to August ahead of the Fed statement.
The whiplash was felt most in the short-end of the Treasury market which is more sensitive to the course of the Fed funds rate. Yields on two-year notes shot up 8 basis points to 43 basis points, the sharpest single-day rise since mid 2011.
Yields on 10-year notes climbed 9 basis points to 2.773 percent. Since they act as the benchmark for bond yields across the globe, the shift will ripple through to higher borrowing costs for many other countries.
The rise in U.S. yields in turn helped lift the dollar and sent the euro reeling back a full cent to $1.3822. Against a basket of major currencies, the dollar rose 0.8 percent to 80.016.
The dollar also jumped a yen to 102.40, a move which could help limit the fallout on Japanese stocks. A weaker yen tends to be seen as positive for Japanese exports and company earnings.
The dollar's gains were gold's undoing, sending the metal down to $1,326.49 an ounce. Its 1.8 percent drop on Wednesday was the biggest one-day fall since January.
Neither has the prospect of rising rates in the United States been good for some emerging markets as it threatens to draw capital away, pressuring equities and currencies.
It also comes as China seems to be weakening its yuan as a way to support a slowing economy, which puts pressure on other nations in the region to lower their currencies to stay competitive on exports.
The yuan hit an 11-month low on Wednesday to be down 0.8 percent for the week, a huge move for the normally tightly controlled currency. Last weekend the People's Bank of China (PBOC) doubled the daily trading band allowed for the yuan to 2 percent from the mid-point that it sets each day.
In oil markets, Brent futures fell 94 cents to $105.85 per barrel as worries over sanctions affecting Russian oil supplies eased.
U.S. crude oil edged up 5 cents to $100.42 on an inventory draw at the benchmark's pricing hub and ahead of the front month contract's expiration. (Editing by Shri Navaratnam)