* Euro near highs vs yen, dollar * Dollar index hovers near four-month lows * Markets expect new stimulus from Fed, announcement at 1630 GMT * Global, European shares dip back after recent gains By Marc Jones LONDON, Sept 13 (Reuters) - The dollar tumbled to its lowest level since early May and stock and bond markets curbed some of their resurgent appetite for risk on Thursday as investors waited to see whether the U.S. Federal Reserve announces a new round of money printing. The MSCI index of global shares - which hit a five-month high on Wednesday after a German court gave the green light to the euro zone's new bailout fund - was 0.5 percent lower by 0830 GMT with markets in London, Paris's CAC-40 and Frankfurt's DAX all in the red. Commodities from oil to gold as well as European government bond markets remained in tight ranges before the Fed decision which is expected to be released at 1630 GMT, followed by Chairman Ben Bernanke's news conference about two hours later. A Reuters poll showed economists raised their bets of a third round of Fed bond buying known as quantitative easing (QE) to 65 percent from 60 percent in August. As the dollar suffered from expectations for QE - which would be equal to printing money and diluting the value of the currency - the euro stayed near four-month highs against the U.S. currency, helped by the signs the euro zone may be starting to get on top of its debt troubles. "Any good will towards risk assets, probably more so in FX land, could be undone pretty quickly if Ben Bernanke fails to live up to what is expected of him and the Fed board today," said Chris Weston, trader at IG Markets. A London-based bond market trader who requested anonymity, struck a similar tone. "It will be a massive disappointment if they don't do anything. We're looking for QE3 and some extension of the zero interest rate policy. If we don't get that it's probably going to be another excuse for Bunds to sell off." The data calendar is light in Europe on Thursday but a barrage of new numbers from the U.S. is due, ranging from employment to producer prices. Fed expectations and the potential for a rise in tensions in the Middle East following the killing of a U.S. diplomat in Libya kept oil prices near $116, consolidating the 30 percent rise it has seen since late June. ECB WARNING The Fed's announcement on a potential new round of mortgage-based purchases is seen by many economists as a welcome move but one that is unlikely to have a sustained long-term benefit for the economic environment. Europe's ability to overcome its debt troubles remains the central focus. Hopes that ECB's bond buying plans could stabilise matters saw South Korea's central bank unexpectedly leave interest rates steady on Thursday. Switzerland's central bank said it would keep the Swiss franc pegged firmly below 1.20 per to the euro saying it too was waiting to see how things developed in the euro zone. A new study published in the ECB's monthly report warned that Spain's debts could hit 104 percent of it economic output by 2016 if it only manages to achieve half of its fiscal repair targets, while in Italy it could peak at 125 percent. "This underlines the importance of governments living up to their commitments," the ECB said. "Failing to achieve this target will immediately give rise to substantial risks for debt sustainability." Italy will test bonds markets later by selling up to 4 billion euros of 3-year and 2.5 billion of 5-year bonds. Ahead of those sales investors were happy to take some profit from the recent gains by riskier debt. German bonds in contrast were testing the top of their recent trading ranges. "Demand at today's BTP auction will be an important test after market dealers' confidence on a possible solution of the debt crisis seems to have taken the right direction." Annalisa Piazza, market economist at Newedge Strategy, said in a note.

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