* Wall St mostly retreats after Fed-driven gains; Nasdaq up

* Dollar rallies after sharp losses, euro down more than 2 pct

* Oil falls after Kuwait says OPEC not likely to cut output (Updates to close of U.S. trading)

By Ryan Vlastelica

NEW YORK, March 19 (Reuters) – U.S. stocks ended mostly lower on Thursday while the dollar resumed its upward trend in a broad rally as investors resumed a bullish stance on the greenback.

The activity was largely a retreat from Wednesday’s heavy move into riskier assets like stocks and oil, after the Federal Reserve’s policy statement struck a more dovish tone than investors had anticipated.

The dollar rebounded from its biggest one-day fall against the euro and sterling in six years. The euro fell more than 2 percent on Thursday, continuing a downward slope that has dragged the currency down more than 20 percent against the dollar since mid-2014.

The U.S. central bank on Wednesday indicated it preferred a more gradual path to normalizing benchmark interest rates, slashing rate projections over the next few years and lowering its outlook on the U.S. economy.

The reaction to the comments was “not the kind of market that’s going to prevail, so it makes sense that pretty much everything we’re seeing today is just a reversal of yesterday’s move,” said Omar Aguilar, chief investment officer of equities for Charles Schwab Investment Management in San Francisco.

Over the longer term, he added, “I expect the dollar to remain strong and commodity prices will continue to be weak.”

The U.S. dollar index, which measures the greenback against a basket of major currencies, rose 0.7 percent. Against the yen, the dollar rose 0.68 percent, to 120.91 yen

The euro fell 2 percent to $ 1.0643, extending its year-to-date decline to about 12 percent. Further weakness could come with the European Central Bank having just started its bond-buying program and Greek debt negotiations still unresolved.

Aguilar said the odds were “pretty high” that the euro would fall under parity with the dollar.

The Dow Jones industrial average fell 116.83 points, or 0.65 percent, to 17,959.36, the S&P 500 lost 10.18 points, or 0.48 percent, to 2,089.32, and the Nasdaq Composite added 9.55 points, or 0.19 percent, to 4,992.38.

The Nasdaq was supported by large-cap biotech stocks. Regeneron Pharma rose 2.9 percent to $ 486.02 while Biogen Idec rose 1.3 percent to $ 433.65.

In Europe, the FTSEurofirst 300 index of top regional shares closed 0.46 percent higher, ending at its highest level since 2007.

MSCI’s all-country world index, a measure of equity performance in 46 countries, was flat, paring earlier gains of nearly 0.9 percent.

Benchmark 10-year U.S. Treasury yields edged higher on the view that the Fed is moving closer to raising rates despite Wednesday’s dovish statement.

Ten-year Treasury notes were last down 7/32 in price to yield 1.9720 percent.

Brent crude oil fell back toward $ 54 a barrel after Kuwait said the Organization of Petroleum Exporting Countries had no choice but to keep production steady, refocusing the market on global oversupply.

Brent for May delivery settled at $ 54.43 per barrel, down 2.6 percent. U.S. crude for April delivery fell 1.6 percent to settle at $ 43.96. Both had rallied sharply on Wednesday, with Brent up nearly 4.5 percent.

Gold rose 0.4 percent while silver jumped 1.25 percent and copper climbed 3.2 percent in its biggest one-day jump since early February.

(Editing by James Dalgleish and Leslie Adler)