* U.S. dollar index turns negative, hits session low, recovers to one-week high
* Euro slips, sterling down on unemployment data
* Wall Street rises but then gives back gains on Fed confidence in rate setting course
* U.S. Treasury 30-year yield hits highest since July 2015. (Updates throughout after Fed minutes; adds comment; adds settled oil prices)
By Hilary Russ
NEW YORK, Feb 21 (Reuters) - The dollar index hit a fresh high after briefly turning negative and stocks gave back gains on Wednesday after the Federal Reserve's rate-setting committee, at its last policy meeting, showed more confidence in the need to keep raising interest rates.
Its more upbeat take on inflation in the minutes of the Jan. 30-31 policy meeting will likely further cement expectations that new Fed chief Jerome Powell will lead his colleagues in raising interest rates next month.
Wall Street, which had already started the day positive, rose further as the Fed's minutes contained no big surprises but then relinquished most of its gains.
"It lined up with market expectations for a continued gradual pace in interest rate hikes," Michael Skordeles, U.S. macro strategist at Suntrust Advisory Services in Atlanta.
"The market view is that we'll see one in March, one in July, and likely something later in the year, November or December," he said. "(The minutes) reassured that there won't really be a whole lot of change despite having a regime change."
The minutes also showed that voting members and the wider group of policymakers had upgraded their forecasts for the economic outlook since December.
The dollar index, which measures the greenback against a basket of other major currencies, dipped following release of the minutes but then recovered. The index was last up 0.31 percent at a one-week high.
Some oil prices softened ahead of expectations that data would show rising U.S. crude inventories.
U.S. crude oil futures settled at $61.68 per barrel, down 11 cents, or 0.18 percent. Brent pared some losses after the dollar index dropped, with Brent last at $65.25, flat on the day.
The U.S. currency has been weighed down this year by concerns that Washington might pursue a weak-dollar strategy, and by the perceived erosion of its yield advantage as other countries start to scale back their easy-money strategies.
Confidence in the dollar has also been shaken by mounting worries over the U.S. budget deficit.
But the greenback finally appeared to be benefiting from rising U.S. bond yields, especially as the Treasury Department issues more debt in anticipation of increased federal spending and a higher deficit from last year's tax overhaul.
U.S. Treasury 30-year bond prices fell more than a point, with the yield hitting its highest since July 2015. Yields on 10-year notes hit session highs after the rate comments.
The euro edged down 0.21 percent to $1.231 as the dollar rose.
In Britain, an unexpected jump in the jobless rate weighed on the pound, helping to send sterling down 0.44 percent to $1.3934.
The Dow Jones Industrial Average rose 8.17 points, or 0.03 percent, to 24,972.92, the S&P 500 gained 4.39 points, or 0.16 percent, to 2,720.65 and the Nasdaq Composite added 34.99 points, or 0.48 percent, to 7,269.30.
The pan-European FTSEurofirst 300 index rose 0.11 percent, and MSCI's gauge of stocks across the globe gained 0.48 percent.
Reporting by Hilary Russ in New York; Additional reporting by Ritvik Carvalho and Amanda Cooper in London; Lindsay Dunsmuir and Jason Lange in Washington; April Joyner and Stephanie Kelly in New York; Editing by Meredith Mazzilli and Steve Orlofsky