* Global markets continue adjusting to prospect of higher US rates
* Spreadbetters see European shares opening slightly higher
* Dollar index hovers near 14-year peak, USD eyes parity with euro
* MSCI Asia-Pacific index up a fraction, Nikkei hits 1-year high
* Oil up, Kuwait may implement bigger-than-expected output cut
* Bullish dollar, higher yields pressure precious metals
By Shinichi Saoshiro
TOKYO, Dec 16 (Reuters) - The dollar stood near a 14-year peak, bond yields were highly elevated and Asian stocks struggled for traction on Friday as global markets continued adjusting to the idea of higher U.S. interest rates.
Ahead of European trading, spreadbetters forecast a slightly higher open for Britain's FTSE, Germany's DAX and France's CAC, with a weaker euro and pound seen supporting European stocks.
In a move that reverberated across the financial markets, the Fed on Wednesday raised rates for the first time in a year and projected three more increases in 2017, up from the two projected in September.
The dollar index against other major currencies last stood at 103.10 after storming to 103.56 overnight, its highest since December 2002.
The euro nudged up 0.2 percent to $1.0435 after hitting $1.0366 overnight, its lowest since January 2003. The dollar was little changed at 118.145 yen after surging to a 10-month high of 118.660 the previous day.
The prospect of the Fed tightening monetary policy next year faster than earlier expected drove the benchmark U.S. Treasury 10-year yield to highs unseen in two years.
Tracking the rise in the U.S. 10-year yield, Japan's 10-year bond yield brushed an 11-month peak of 0.10 percent . That gain is expected to test the Bank of Japan's resolve to keep the yield around zero percent.
Asian stocks were tepid, reflecting the differing fortunes for developed and emerging market economies faced with higher U.S. interest rates.
"Emerging market countries have been hit the hardest by capital leaving in search of higher yields and return along with the growing cost of paying back dollar denominated debt," wrote Kathy Lien, managing director of FX strategy at BK Asset Management.
MSCI's broadest index of Asia-Pacific shares outside Japan was a shade lower after falling 1.8 percent on Thursday.
Shanghai was flat after losing 0.7 percent the previous day, while Malaysian and Indonesian shares weakened slightly. South Korea's Kospi added 0.2 percent.
Japan's Nikkei climbed 0.7 percent, reaching a one-year high on a weaker yen and gains on Wall Street overnight. U.S. shares rose on Thursday, brushing off the initial shock of a more hawkish Fed, led by banks seen as beneficiaries of higher rates.
European stocks also gained on higher bank stocks, adding 1 percent on Thursday.
Emerging market currencies, hit after November's U.S. election win by Donald Trump raised the spectre of higher U.S. rates, suffered a fresh blow from the Fed's latest move.
China on Friday set the yuan's midpoint at its weakest since 2008. Brazil's real fell as much as 2 percent overnight while the Indonesian rupiah and South Korean won saw their worst losses since Trump's win.
However, the Mexican peso strengthened after the country's central bank on Thursday countered the Fed's tightening with an aggressive rate hike.
In commodities, precious metals sagged in the wake of a stronger dollar. Spot gold and platinum were near 10-1/2-month lows of $1,122.35 and $885 an ounce hit overnight while silver dropped to its lowest since June.
"The bearish factors for gold namely a high U.S. dollar, rising yields and equities and risk-on investor demand appetite leave bullion clearly on the defensive," said HSBC analyst James Steel.
Copper was up 0.1 percent at $5,737 a tonne. It has drifted down from a 17-month peak above $6,000 reached in November on speculation that a Donald Trump presidency would usher in fiscal stimulus and boost demand for metals.
Crude oil prices nudged higher as expectations that Kuwait would cut supplies by a larger than expected amount as part of a coordinated effort by oil producers to cut output offset negative pressures from a bullish dollar.
Brent crude gained 0.5 percent to $54.28 a barrel. (Reporting by Shinichi Saoshiro; Additional reporting by Swati Verma in Bengaluru; Editing by Simon Cameron-Moore)