GLOBAL MARKETS-Wall Street rally eases as bond yields perk up

(Adds gold, oil settlement prices)

* Stocks on Wall Street and in Europe gain

* Crude oil prices hit fresh seven-year highs, then slip

* China stocks gain after cut in benchmark mortgage rates

* Risk of Russia-Ukraine flare up could weigh on markets -ING

By Herbert Lash and Huw Jones

NEW YORK/LONDON, Jan 20 (Reuters) - Bond yields backed off their rapid rise this week and Wall Street rebounded on Thursday as investors in Big Tech licked their wounds after Nasdaq's slide into correction territory.

But concerns the Federal Reserve will be more aggressive in raising interest rates this year than the market has priced still weighed on confidence as investors look to the U.S. central bank's policy meeting next week for fresh guidance.

Crude prices initially eased before climbing to fresh seven-year highs and the major indices on Wall Street sharply pared gains of more than 1%. The dollar edged up as the week's big rally in U.S. Treasury yields showed signs of resuming.

Strong earnings reports helped lift 10 of 11 sectors of the S&P 500 into the black in a broad rally while the major stock indices in Europe also gained. MSCI's U.S.-centric all-country world index rose almost 1%.

With all the noise about Fed tightening there has been little discussion about companies posting strong earnings, said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder.

"Companies are giving guidance as a quarter evolves. That's a positive," Ghriskey added. "It's buying the dip. The market's oversold. Are we going to go back to new highs? Eventually."

Advancing shares on both the New York Stock Exchange and Nasdaq outpaced declining shares by about 2:1 ratio as gains in the three major indices of more than 1% ebbed on Wall Street.

The broad pan-European FTSEurofirst 300 index closed up 0.51%. On Wall Street, the Dow Jones Industrial Average rose 0.48%, the S&P 500 gained 0.45% and the Nasdaq Composite climbed 0.54%.

Investors have been concerned about rising rates because they raise borrowing costs and could dent global growth prospects and douse the earnings outlook for companies.

A Reuters poll of economists showed they expect the Fed to tighten monetary policy at a much faster pace than thought a month ago to tame high inflation.

Chair Jerome Powell will stick to the Fed's message of tighter monetary policy next week as inflation has become a hot political issue, said Joe LaVorgna, chief economist for the Americas at Natixis.

"There's no reason for him at the moment to deviate from what clearly has been a more hawkish script. That runs the risk of the markets maybe getting more nervous next week," LaVorgna added.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, rose 2.4 basis points at 1.049%. The yield on 10-year Treasury notes was up 0.5 basis points to 1.833%, but was lower than the two-year high of 1.902% it breached on Wednesday.

The key catalyst for markets so far in 2022 has been expectations of higher rates as the Fed tightens monetary policy, said Kevin Flanagan, head of fixed income strategy at WisdomTree Investments Inc.

"Given the amount of selling pressure we saw earlier in the week, the market is just consolidating a little bit. Rates don't always move every day in the same direction," Flanagan said.

European Central Bank head Christine Lagarde said euro zone inflation will decrease gradually over the year, adding that the ECB did not need to act as boldly as the Fed because of a different economic situation.

ASIA PERKS UP, UKRAINE EYED

Asian share markets broke a five-day slide, pushing higher on Thursday as China underscored its diverging monetary and economic picture by cutting benchmark mortgage rates.

China's blue-chip CSI300 index rose 0.9% on the day, led by property developers, amid hopes government measures would ease a funding squeeze in the embattled sector, even as another developer warned of default.

Analysts at ING said geopolitical risks, notably the possibility of Russia invading Ukraine, could continue to weigh on global shares, adding to pressure on rising rates concerns.

The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.128% to 95.728, while the yen fell 0.15% at $114.1500. The euro slid 0.26% to $1.1311.

Crude prices rebounded but settled slightly lower. Brent crude settled down $0.06 to $88.38 a barrel. U.S. crude futures slid $0.06 to settle at $86.90 a barrel.

Gold and silver touched two-month highs, lifted by worries surrounding inflation and Russia-Ukraine tensions.

Gold and silver touched fresh two-month highs, lifted by worries surrounding inflation and Russia-Ukraine tensions.

U.S. gold futures settled flat at $1,842.60 an ounce, while silver rose 2.1% to $24.63.

(Reporting by Herbert Lash, additional reporting by Huw Jones in London, Andrew Galbraith; Editing by Will Dunham, Bernadette Baum and Cynthia Osterman)