* U.S. stocks last down slightly, but trade both sides of flat
* Dollar turns higher
* Short-term Treasury yields rise (Updates to after Fed statement)
By Caroline Valetkevitch
NEW YORK, Dec 14 (Reuters) - Yields on shorter-dated Treasuries hit their highest in more than five years while the dollar turned positive on Wednesday after the U.S. Federal Reserve raised interest rates as expected and signaled a faster pace of hikes in 2017.
U.S. stocks were down slightly after trading both sides of unchanged in choppy action following the statement from the Fed, which raised the target federal funds rate 25 basis points to between 0.50 percent and 0.75 percent.
Central bank policymakers also shifted their outlook to one of slightly faster growth, with President-elect Donald Trump planning a simultaneous round of tax cuts and increased spending on infrastructure.
"It was little more hawkish than the market was expecting ... bonds are selling off in response to this," said David Joy, chief market strategist at Ameriprise Financial in Boston.
Yields on two-year Treasury notes rose to their highest since August 2009, while three-year yields hit their highest since May 2010 and five-year yields rose to their highest since May 2011.
The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.6 percent at 101.73 .
In the stock market, the Dow Jones industrial average fell 20.07 points, or 0.1 percent, to 19,891.14, the S&P 500 lost 6.89 points, or 0.303294 percent, to 2,264.83 and the Nasdaq Composite dropped 22.88 points, or 0.42 percent, to 5,440.95.
MSCI's all-country world stock index was down 0.6 percent, and the pan-European STOXX 600 share index ended down 0.5 percent.
For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Additional reporting by Chuck Mikolajczak in New York; Editing by Robin Pomeroy and Nick Zieminski)