* World equity index edges higher, but heads for 4th weekly loss
* Sentiment fragile ahead of Fed meeting
* Dollar extends declines vs yen; Treasury prices advance
By Wanfeng Zhou
NEW YORK, June 14 (Reuters) - Major stock markets rose on Friday but were headed for a fourth straight week of losses, while the dollar fell further against the yen as investors worried that major central banks will soon start withdrawing stimulus.
Oil prices rose more than 1 percent on concern an escalation in Syria's civil war could drag in other countries and plunge the whole oil-producing region into conflict.
Jitters over the longevity of monetary policy around the world has roiled markets recently, and nerves were stretched further this week when the Bank of Japan decided to hold policy steady.
The concerns have fueled a selloff in global equities, emerging markets, risky bonds and commodities, which have been buoyed by central bank liquidity, while driving the safe-haven yen sharply higher.
Wall Street stocks were down slightly in early trading after rallying more than 1 percent on Thursday on stronger-than-expected U.S. economic data. Attention is shifting to a meeting of Federal Reserve policymakers next week, which would shed light on when the U.S. central bank plans to scale back its monthly $85 billion bond purchase program.
"Markets are looking at next week's Fed meeting to be the big driver in the short-term," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
Fed chief Ben "Bernanke has really increased the amount of transparency in the Fed's thinking," said Forrest. "This isn't going to be a jack-in-the-box surprise Fed; it's going to be a Fed that clearly indicates what it's going to do. That's why people are looking to this meeting in particular."
The Dow Jones industrial average slipped 15.24 points, or 0.10 percent, at 15,160.84. The Standard & Poor's 500 Index was down 1.35 points, or 0.08 percent, at 1,635.01. The Nasdaq Composite Index was down 7.38 points, or 0.21 percent, at 3,437.99.
The MSCI's world index rose 0.4 percent to 364.03, but was on pace for a weekly loss of 0.4 percent, the fourth straight weekly decline.
Markets have been spooked by the idea the U.S. central bank could start cutting back its support, which has helped drive up asset prices over the last four years. But Philippe Gijsels, head of research at BNP Paribas Global Markets, said with growth patchy, he does not expect any changes before the end of the year.
"If you have easy monetary policy and improving economic conditions, which will also help companies to produce good earnings ... then you have a lot of the building blocks in place (to drive stock market gains)," he said.
Emerging market equities were headed for a fifth consecutive week of losses, although a market index rose 1.4 percent on Friday.
Top European stocks climbed 0.3 percent, tracking a rebound in Japanese and Asian shares.
Despite climbing 2 percent on Friday, Japan's Nikkei is nursing losses of more than 15 percent since mid-May. The volatility in stocks has driven a sharp rebound in the yen.
"The yen has proved to be investors' go-to safe haven to ride out global stock market volatility," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington D.C.
"The uncertainty has prompted investors to exit recently overcrowded plays like betting on the dollar and Japan's Nikkei stock index and against the yen," he said. "With that play now in reverse, the yen has steadily been squeezed higher."
The dollar fell 0.2 percent to 95.16 yen, paring steep losses in the overnight session, when it fell as low as 94.42 yen.
The euro lost 0.5 percent to 126.88 yen. Against the dollar, it slipped 0.3 percent to $1.3331.
The benchmark 10-year U.S. Treasury note was up 10/32, the yield at 2.1116 percent.
Brent crude rose $1.35 to $106.30 a barrel, while U.S. crude gained $1.11 to $97.80 a barrel.
Spot gold rose slightly to $1,388 an ounce.