By Hilary Russ

NEW YORK (Reuters) - U.S. stocks closed lower in choppy trading and the U.S. dollar surged on Friday as investors grappled with the possible timing of an interest rate hike after comments from several Federal Reserve officials, including Chair Janet Yellen.

Oil steadied in a volatile session and Treasury prices fell as investors across asset classes parsed the details of Yellen's presentation, markets' central focus of the week.

"The Fed served notice that a rate hike is still a possibility this year, and the markets had gotten a little complacent," said Anthony Valeri, investment strategist for LPL Financial in San Diego. "You're seeing the Treasury market and stocks have an adjustment."

In her much-awaited speech at an international gathering of central bankers in Jackson Hole, Wyoming, Yellen did not indicate when the Fed might hike rates. But her comments reinforced the view that such a move could come later this year.

The Fed has policy meetings scheduled in September, November and December.

The dollar rallied quickly off Yellen comments that were perceived as hawkish, said Minh Trang, senior FX trader at Silicon Valley Bank in Santa Clara, California.

"The overall takeaway, not just from Yellen but for the week, is that all the Fed officials - the voter and no-voter alike - have all taken a hawkish bent. The only downside I see is that there are only three meetings left this year and time is running out. Given the Fed's history, it's difficult to see them hiking more than once this year."

In a mid-day interview on CNBC after Yellen spoke, the Fed's No. 2 policymaker, Vice Chair Stanley Fischer, suggested that rate hikes were on track for this year. U.S. stocks, which had been higher, then fell.

The odds of a hike in September climbed to 30 percent from 21 percent on Thursday, according to CME Group's FedWatch tool. Traders were pricing in a 60.2 percent chance of a hike in December, up from 51.8 percent on Thursday.

The Dow Jones industrial average <.DJI> fell 53.01 points, or 0.29 percent, to 18,395.4, the S&P 500 <.SPX> lost 3.43 points, or 0.16 percent, to 2,169.04 and the Nasdaq Composite <.IXIC> added 6.71 points, or 0.13 percent, to 5,218.92.

"The market ... needed to digest both Yellen and Fischer’s comments and it is reacting in a way that is very consistent with an interest rate move," said David Schiegoleit, managing director at U.S. Bank Private Client Reserve in Los Angeles.

"Taken in balance the market has found a new direction today; it's just with those comments coming so close together we got bounced around a little bit."

The greenback hit a two-week high against the yen <JPY=> and Swiss franc <CHF=>, and a 10-day peak against the euro <EUR=>. In afternoon trading, the dollar was up 0.74 percent at $95.47 versus a basket of major currencies <.DXY>.

Oil prices stabilized after taking cues from the dollar and reacting to reports of Yemeni missiles hitting Saudi Arabia's oil facilities.

Brent crude futures pared some gains in post-settlement trading <LCOc1>, last up about 0.2 percent, or 11 cents, at $49.78. U.S. crude <CLc1> ended the session 31 cents higher at $47.64 but later fell back to $47.38.

European stocks gained strength, with a late boost from Yellen's remarks. The pan-European STOXX 600 <.STOXX> closed up 0.5 percent.

Euro zone government bond yields, including Germany's 10-year bond <DE10YT=TWEB>, fell.

U.S. Treasury prices slumped as investors evaluated whether the Fed is likely to raise rates in September.

Benchmark 10-year notes <US10YT=RR> were down 16/32 in price to yield 1.63 percent, the highest since June 24, and up from 1.56 percent before Yellen's comments.

(Additional reporting by Jason Lange and Ann Saphir in Jackson Hole, Chuck Mikolajczak, Gertrude Chavez-Dreyfuss, Jonathan Spicer, Karen Brettell and Devika Krishna Kumar in New York; Editing by Dan Grebler and Chizu Nomiyama; For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=