* Wall Street shares retreat, S&P, Dow slip from record peaks
* U.S. bond prices fall on doubts over low-rate outlook
* European, Japanese stocks rally after U.S. gains
* Gold stumbles to 6-month low on less Fed stimulus
By David Gaffen and Richard Leong
NEW YORK, Dec 19 (Reuters) - Major U.S. stock averages retreated on Thursday from record levels set one day after the Federal Reserve started scaling back its crisis-era stimulus, while U.S. government bond prices fell as doubts emerged on the Fed's commitment to low interest rates.
Gold slid to a six-month low, extending months of weakness after the U.S. central bank finally took its first step to roll back its ultra-loose policy that has lifted the value of the precious metal to record territory in recent years.
Markets took the Fed's $10 billion reduction in monthly bond purchases well on Wednesday after months of agonizing over when the Fed would start shrinking its third round of quantitative easing that has helped underpin gains in riskier assets such as equities and commodities. Losses in Treasury prices, most directly affected by the Fed action, were modest.
"I was surprised by the Fed's decision and delighted with the market's response," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. "Today we have a normal pullback after the big move. Investors want to take chips off the table."
Major U.S. indexes retreated from records hit the previous day on the S&P 500 and the Dow after a few weak economic releases, including a surprising rise in weekly jobless claims and weaker-than-expected sales of existing homes.
The global MSCI World Index clawed back in positive territory, up 0.2 percent as Wall Street shares pared initial losses. The index was 0.1 percent lower earlier as a result of weakness in China and the United States.
The bond market was a bit more worried on Thursday. Most issues were lower, with the 10-year benchmark Treasury note yield rising to 2.93 percent, but the most significant selling was in the five- to seven-year maturities on concerns about the Fed's eventual plans to raise interest rates.
The Fed's message that "tapering was not tightening" looked to have resonated in debt markets as Fed fund futures held broadly steady. A first hike in the funds rate is not fully priced in until about October 2015.
However, analysts expressed concerns that the Fed did not reduce its preferred target on the U.S. unemployment rate for when it would start raising rates. Currently that threshold is 6.5 percent, though outgoing Fed Chairman Ben Bernanke said on Wednesday that the threshold was not a trigger, and the Fed most probably would keep rates at the zero level long after the household rate fell below 6.5 percent.
"There's a bit of disappointment in the forward guidance," said John Bellows, portfolio manager at Western Asset Management in Pasadena, California, which manages $443 billion in assets. He said some in the market were looking for stronger language to show the Fed's commitment to near-zero interest rates.
"At the end of the day, it's all about commitment. It's all about it being bullet-proof, so it was kind of disappointing."
Supply of five-year Treasury Inflation-Protected Securities and seven-year notes also contributed to early selling pressure.
Solid demand at the TIPS auction helped stabilize Treasuries prices. The 10-year note was at 2.93 percent, below this year's 3 percent peak. The seven-year note fell a half point in price to boost its yield to 2.34 percent after touching its highest yield in three months.
On Wall Street, the Dow Jones industrial average was up 4.01 points, or 0.02 percent, at 16,171.98. The Standard & Poor's 500 Index was down 2.47 points, or 0.14 percent, at 1,808.18. The Nasdaq Composite Index was down 12.47 points, or 0.31 percent, at 4,057.60.
Commodity markets showed some trepidation. Gold shed 1.8 percent at a six-month low of $1,193.60 an ounce, close to the year low at $1,180.74. Copper fell the most in nearly three weeks, losing 0.8 percent to $7,209.50 a tonne.
Oil prices bucked the trend on supply concerns. Brent crude rose 87 cents at $110.50 a barrel. U.S. oil futures rose $1.26 to $99.06 a barrel.
The dollar was the other major beneficiary, as it held near a five-year high as the Japanese yen although it was down 0.2 percent on day at 104.13 yen.
EUROPE, ASIA RALLY ON FED
After Wall Street ended at a record high and Tokyo and some other parts of Asia posted big gains, top European stocks jumped 1.8 percent in their biggest rise in over two months.
European debt markets barely blinked. Benchmark German borrowing costs were little changed with the 10-year yield holding at 1.871 percent.
Still, Fed's tapering could be a double-edged sword for some countries since it could accelerate the "great rotation" of funds out of emerging markets into developed world assets.
Indonesia, the Philippines, Thailand and Malaysia have all been hit to a varying extent in recent months. For example, the Indonesian rupiah hit a fresh five-year low.
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