* Fed to let leverage exemption expire on March 31 * U.S. 10-year yields near 14-month highs * Dollar hits highest level in a week * Oil prices rise after steep Thursday fall (Recasts with opening of U.S. markets, adds dateline) NEW YORK/LONDON, March 19 (Reuters) - A gauge of global stocks fell on Friday as declines in U.S. bank shares weighed on the S&P 500 after the Federal Reserve said it would let a key leverage exemption expire, while oil prices steadied after getting pummeled a day earlier. Benchmark U.S. Treasury yields, which have driven market moves broadly in recent weeks, hovered near 14-month highs while the U.S. dollar strengthened for a second day. Big U.S. banks will have to resume holding an extra layer of loss-absorbing capital against U.S. Treasuries and central bank deposits from next month after the Fed said it would not extend a temporary waiver that had exempted those assets from a key bank leverage rule. Stocks globally eased as investors sought the next reasons to add risk following the passing of President Joe Biden’s $1.9 trillion stimulus plan, broadening COVID-19 vaccinations and encouraging economic news. “We have had such a strong period of news-flow and catalysts on the positive end that now that a lot of those have largely been put into the market, we are now a little bit more susceptible to negative news causing big drawdowns,” said Mark Hackett, chief of investment research at Nationwide. On Wall Street, the Dow Jones Industrial Average fell 180.2 points, or 0.55%, to 32,682.1, the S&P 500 lost 2.15 points, or 0.05%, to 3,913.31 and the Nasdaq Composite added 73.93 points, or 0.56%, to 13,190.09. The S&P 500 banks index dropped 1.9%. The pan-European STOXX 600 index lost 0.87% and MSCI’s gauge of stocks across the globe shed 0.33%. Markets have been consumed by moves in U.S. bond yields, with investors still digesting the Fed’s meeting earlier this week. The central bank said it expects higher economic growth and inflation in the United States this year, although it repeated its pledge to keep its target interest rate near zero. Benchmark 10-year notes last rose 1/32 in price to yield 1.7281%, from 1.729% late on Thursday. The 10-year yield hit 1.754% on Thursday, its highest level since January 2020. “Ultimately, what we’re seeing now is a great deal of tension between market prices that embed several rate hikes before the end of 2023 and the Fed’s forecast that doesn’t expect lift-off until 2024,” said Ryan Swift, U.S. bond strategist at BCA Research in Montreal. The dollar extended gains against major currencies, hitting its highest level in a week. The dollar index rose 0.208%, with the euro down 0.2% to $1.1891. Oil prices gained after falling about 7% in the prior session, when a new wave of coronavirus infections across Europe dampened expectations of any imminent recovery in fuel demand. U.S. crude recently rose 0.9% to $60.54 per barrel and Brent was at $63.74, up 0.73% on the day. Additional reporting by Karen Pierog in Chicago, Medha Singh in Bengaluru; editing by Larry King, Kirsten