* Graphic: Global asset performance tmsnrt.rs/2yaDPgn * Graphic: World FX rates tmsnrt.rs/2egbfVh LONDON, June 21 (Reuters) - Global stocks dropped to a four-week low on Monday after last week’s surprise hawkish shift by the U.S. Federal Reserve reduced the allure of riskier assets, while the dollar held gains and stood near a 10-week high. European stocks opened lower, but the pan-European STOXX 600 index erased early losses to trade flat on the day, helped by a rise in German and Italian shares. Britain’s FTSE 100 was off 0.05%, France’s CAC 40 index fell 0.3%, and Spain’s IBEX 35 fell 0.6%. MSCI’s All Country World Index, which tracks shares across 49 countries, was down 0.3% and traded at its lowest since May 24. Benchmark 10-year U.S. Treasury yields fell to the lowest since Feb. 24 at 1.3540%, while those on 30-year bonds slid as low as 1.9290% for the first time since Feb. 11. The yield curve - measured by the spread between two- and 30-year yields - was the flattest since late January as investors brought forward rate hike expectations while lowering the longer-term outlook for growth and inflation. The U.S. dollar hovered near the 10-week high touched on Friday versus major peers, following its biggest weekly advance in more than a year. “Last week’s dollar rally is a combination of expectations and positioning (sold dollars), a concern that the Fed is “behind the curve” (and therefore must do more and earlier than expected) and that stock markets have started to lose ground which makes the dollar strengthen as the most defensive currency,” said Filip Carlsson, junior quantitative strategist at SEB. “We still see this as a correction and not the beginning of a new trend.” Shares of banks, energy firms and other companies that tend to be sensitive to the economy’s fluctuations have fallen sharply following the Fed’s meeting on Wednesday, when the central bank caught investors off guard by anticipating two quarter-percentage-point rate increases in 2023. St. Louis Fed President James Bullard further fuelled the sell-off on Friday by saying the shift toward faster policy tightening was a “natural” response to economic growth and particularly inflation moving quicker than expected as the country reopens from the coronavirus pandemic. “The Fed’s pivot to begin the tightening discussion caught most by surprise, but markets began discounting this inevitable process months ago in our view,” Morgan Stanley analysts wrote in a report. “It’s exactly what the mid-cycle transition is all about, and fits nicely with our narrative for choppier equity markets and a 10-20% correction for the broader indices this year.” Earlier in Asia, Japan’s Nikkei led declines with a 3.6% drop and dipped below 28,000 for the first time in a month, while MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.4%. Chinese blue chips lost 0.7%. U.S. stock futures pointed to gains when Wall Street reopens, up 0.2% after Friday’s 1.3% slide in the S&P 500 . Nasdaq futures were up 0.3%. Several Fed officials have speaking duties this week, including Chair Jerome Powell, who testifies before Congress on Tuesday. European Central Bank President Christine Lagarde speaks before the European Parliament on Monday. The euro traded near its lowest against the dollar since April 6 at $1.1887 on Monday, dropping from as high as $1.21457 last Tuesday. Sterling recovered some ground, to trade 0.3% higher at $1.3836 after hitting its lowest since April 16 on Friday. Commodity-linked currencies have also suffered, with the Australian dollar hovering above a six-month low at $0.7495. A stronger greenback has pressured cryptocurrencies too, with bitcoin falling 4.2% to around $34,112, while smaller rival ether lost 5.7% to around $2,115. In commodities, gold rebounded 1.1% to $1,782.90 an ounce on Monday, looking to snap a six-day losing streak, but still remained near the lowest since early May. Three-month copper on the London Metal Exchange fell to its lowest since April 15, following an 8.6% drop last week, the biggest weekly fall since March 2020. Crude oil rose for a second day, underpinned by strong demand during the summer driving season and a pause in talks to revive the Iran nuclear deal that could indicate a delay in resumption of supplies from the OPEC producer. Brent crude futures rose 0.2% to $73.64 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 0.3% to $71.83 a barrel. Reporting by Ritvik Carvalho; additional reporting by Kevin Buckland in Tokyo; Editing by Catherine Evans Our Standards: The Thomson Reuters Trust Principles.