(Changes dateline to New York; adds Wall Street open; updates throughout)
* Global shares mostly recover after China downgrade
* Dollar flat as investors await Fed minutes
* European shares fall, oil prices dip
NEW YORK, May 24 (Reuters) - World stock markets recovered on Wednesday from initial losses after Moody's first credit downgrade of China in 30 years, with investors turning their attention to U.S. Federal Reserve minutes that could provide more certainty of a rate hike next month.
Asia stocks and emerging markets initially skidded after Moody's Investors Service's downgraded China, cutting its sovereign debt to A1 from Aa3.
But dented markets mostly recovered. Japan's Nikkei rose 0.66 percent and emerging market stocks rose 0.05 percent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.05 percent lower.
Markets were lacking fresh economic or corporate drivers. Investors shrugged off the rise in Britain's terror threat level to maximum in the wake of Monday's attack in Manchester.
The Dow Jones Industrial Average rose 20.59 points, or 0.1 percent, to 20,958.5, the S&P 500 gained 1.15 points, or 0.05 percent, to 2,399.57 and the Nasdaq Composite added 7.18 points, or 0.12 percent, to 6,145.89.
The U.S. dollar hovered just above its 6-/12 month lows as investors shifted from U.S. politics to monetary policy ahead of the release of the minutes from the Fed's May meeting, scheduled to be released at 1800 GMT on Wednesday.
Measured against a basket of other major currencies, the dollar index rose 0.03 percent.
"The dollar has taken quite a beating over the last month," said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.
"You are seeing a little bit of calming down this morning as there is very little economic or headline news to really sway the market one way or other."
Interest rate futures implied traders see about an 80-percent chance of a quarter-point rate hike at the Fed's June meeting.
"Our U.S. economists expect the minutes to come down on the hawkish side and continue to expect the Fed to hike in June and September and announce balance sheet reduction in December," Citi analysts wrote on Wednesday.
While recent economic data has been mixed, with signs of a dip in consumer sentiment and spending, the job market continues to strengthen. That could give the Fed impetus to continue with its path of monetary tightening.
Oil prices well, with U.S. crude down 0.29 percent to $51.32 per barrel and Brent last at $54.00, 0.28 percent lower on the day.
The pan-European FTSEurofirst 300 index lost 0.06 percent and MSCI's gauge of stocks across the globe shed 0.08 percent.
The euro was 0.03 percent lower at $1.1179.
Spot gold added 0.2 percent to $1,252.75 an ounce. (Additional reporting by Jamie McGeever in London, Saqib Iqbal Ahmed in New York; Editing by Nick Zieminski)