GLOBAL MARKETS-Dollar firms up, shares sag after Bernanke
* Dollar extends modest overnight gains after Bernanke remarks
* Mild profit taking on European shares after recent rally
* Bunds track minor gains in U.S. Treasuries
LONDON, July 18 (Reuters) - Shares sagged on Thursday and the dollar firmed up after the head of the Federal Reserve reiterated the U.S. central bank's plans to begin weaning markets off its stimulus support over the next year.
The dollar index was up 0.2 percent, extending modest overnight gains made after Ben Bernanke stuck to a timeline he first outlined in June to wind down the Fed's $85 billion a month bond-buying programme. Bernanke went out of his way, however, to stress that the cautious withdrawal would depend on economic conditions.
European shares on the broad FTSEurofirst 300 opened 0.3 percent lower, as mild profit-taking saw them give back a sliver of the 8 percent they have gained over the last month. Oil and growth-attuned copper also eased.
Mouhammed Choukeir, Chief Investment Officer of fund manager Kleinwort Benson, said markets were likely to remain highly sensitive to signals about easy monetary policy.
"QE (quantitative easing) is here to stay a little longer, but it has to stop one day," Choukeir said. "The volatility in the past few weeks has perhaps been a glimpse of what is to come."
"Where a QE world is a world in which risk assets (equities) go up and safe havens (government bonds and gold) also go up, it would appear that a new post-QE world is one where risk assets go down and safe havens also go down."
In the debt, benchmark German Bunds tracked minor Bernanke-fuelled gains overnight by U.S. Treasuries.
Focus was also on peripheral euro zone debt ahead of a no confidence vote against Portugal's ruling coalition later in the day. The motion is likely to fail, but markets will be on the lookout for any signals sent by the three main parties, which are holding talks on a broad deal to keep the country's bailout programme on track.
Spain and France also hold bond auctions in a tougher environment on Thursday, with Spain's prime minister fighting a corruption scandal and France having just lost its last triple-A sovereign credit rating from a major ratings agency.