GLOBAL MARKETS-Shares, dollar drop on Fed tapering unease
* Fed officials' comments raise concern over stimulus pullback
* Bank of England ties rates to jobs
* Wall St and European shares tumble
* Yen touches 7-week high against dollar
NEW YORK, Aug 7 (Reuters) - World share indexes dropped on Wednesday and the dollar fell for a fourth day in a row as investors grew concerned over when the Federal Reserve will start to wind down its stimulus program.
Stocks on Wall Street opened lower, the third down day in a row, though indexes were still not far below record highs. The Fed's bond buying program has been a major driver of the rally in equities this year, which has the S&P 500 up about 18 percent for the year.
"We're still only a few points under our all-time high, so it isn't surprising to see people take profits in a somewhat frothy market," said Randy Frederick, managing director of active trading for Charles Schwab in Austin, Texas.
"At these levels, there's plenty of room to the downside before there's reason to be concerned."
Investors have been focused on trying to pinpoint when the Fed may start to reduce its $85 billion a month in bond purchases.
Chicago Fed President Charles Evans said Tuesday the Fed would probably scale back its bond-buying program later this year, perhaps beginning to do so as early as next month, depending on economic data.
That was similar to earlier comments by Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, although he told Market News International the central bank might continue its stimulus program if growth doesn't meet its targets.
The Dow Jones industrial average fell 79.82 points, or 0.51 percent, to 15,438.92. The Standard & Poor's 500 Index lost 11.17 points, or 0.66 percent, to 1,686.20. The Nasdaq Composite Index gave up 29.11 points, or 0.79 percent, at 3,636.67.
"The comments weren't especially out of the ordinary, but there's not much for the market to be trading off of otherwise," said Frederick.
The uncertainty weighed on European shares as well, as did comments from the Bank of England that it plans to keep rates at a record low of 0.5 percent until unemployment falls to 7 percent, a level unlikely for another three years. BoE Governor Mark Carney also made any move conditional on inflation staying low and the financial system being stable.
Europe's broad FTSE Eurofirst 300 index shed 0.2 percent and the MSCI world equity index was down 0.8 percent.
Sterling rose against the greenback, climbing to its highest in one and a half months, as investors viewed Carney's comments as less dovish than expected. The pound was last up 1 percent at $1.5501.
The yen rose to a seven-week peak against the dollar on expectations that Japanese investors would convert their overseas earnings before the mid-August Obon holiday. The dollar was down 1.1 percent at 96.66 yen.
The dollar index was down 0.3 percent at 81.37.
"Dollar sentiment hasn't been the same since last week's tepid U.S. jobs report, which suggested the Fed would move more patiently to slow a stimulus program that has long been a thorn in the dollar's side," said Joe Manimbo, senior market analyst, at Western Union Business Solutions.
"A slower U.S. data calendar this week also hasn't offered a fresh impetus for investors to bid the dollar higher."
U.S. Treasuries prices rose as some traders anticipated firm demand at a $24 billion auction of 10-year notes later in the day. 10-year Treasury notes were up 3/32 in price with a yield of 2.629 percent.