* Shares fall worldwide on worries of stimulus cutback
* Dollar recoups losses, trades flat vs euro after U.S. data
* Oil set for biggest weekly drop since mid-April
By Herbert Lash
NEW YORK, May 24 (Reuters) - Global equity markets edged lower on Friday on worries the U.S. Federal Reserve may curb its stimulus program, while the dollar recovered against the euro to trade flat after better-than-expected U.S. durable goods data for April.
European shares fell, marking their first weekly decline in five weeks, while U.S. stocks were poised to do the same after testimony by Fed Chairman Ben Bernanke sparked speculation the U.S. central bank will soon trim its support for the economy.
The Fed's purchasing of Treasuries and mortgage-backed securities, being conducted at a monthly pace of $85 billion, has been a boon to equities markets and other riskier assets.
Bernanke's congressional testimony on Wednesday and the release that day of minutes from the latest Fed policy-setting meeting produced a shift that "reintroduced a sense of caution that has long been absent" in markets, said Peter Kenny, chief market strategist at Knight Capital in Jersey City, New Jersey.
After early declines, stocks on Wall Stocks pared losses with the Dow briefly edging into positive territory.
"Now the market has heard Bernanke and seen the minutes and we're seeing some better data, the market is going to start to decide where they think the Fed is going, sooner than later," said Jason Rogan, managing director of Treasuries trading at Guggenheim Partners in New York.
The Fed minutes showed that some policymakers were willing to consider scaling back on bond purchases as early as the Fed's June meeting.
MSCI's all-country world equity index fell 0.1 percent, while Europe's broad FTSE Eurofirst 300 index of leading shares closed down 0.27 percent to a 1,226.58.
On Wall Street, the Dow Jones industrial average was up 0.03 points, or 0.00 percent, at 15,294.53. The Standard & Poor's 500 Index was down 2.38 points, or 0.14 percent, at 1,648.13. The Nasdaq Composite Index was down 5.74 points, or 0.17 percent, at 3,453.67.
Gold prices initially rose, on track for its biggest weekly rise in a month after recent sharp declines, but later pared gains to trade lower.
Spot gold prices fell $5.24 an ounce to $1,385.40.
Orders for long-lasting U.S. manufactured goods rose more than expected in April, a hopeful sign that a sharp slowdown in factory output could soon run its course.
New orders for durable goods increased 3.3 percent last month, the U.S. Commerce Department said, and it revised prior readings for orders to show a smaller decline in March than previously estimated.
The dollar extended its declines against the yen in afternoon trade and was on track for its biggest weekly loss in three years against the Japanese currency.
The euro was last at $1.2929, down about 0.05 percent against the dollar. Against the yen, the dollar was last 0.94 percent lower, at 101.07 yen..
Earlier, the euro had risen against the dollar after the monthly German Ifo survey showed that business morale improved more than expected in May. The data suggested that Germany, Europe's biggest economy, is picking up, making further euro zone monetary easing less likely.
Oil prices rebounded in late afternoon trading in New York after a report of a gasoline unit shutdown at a refinery, and as traders bought contracts to cover short positions ahead of a long holiday weekend in the United States.
Genscape said it detected the shutdown of the 70,000 barrel per day fluid catalytic cracker at Irving Oil's 300,000 bpd refinery in St. John's, Canada.
Brent rose 20 cents to settle at $102.64 a barrel. U.S. crude fell 10 cents to settle at $94.15 a barrel.
The benchmark 10-year U.S. Treasury note was up 1/32 in price to yield 2.0107 percent.