* Euro on back foot before ECB policy meeting
* European stocks up 0.4 percent, bond yields nudge up
* Dollar near 12-1/2-year high after Fed hike talk
* Precious and industrial metals languish
By Marc Jones
LONDON, Dec 3 (Reuters) - Investors were hoping for another bit of Mario Draghi magic on Thursday, after risk assets were left bruised by comments from the head of the Federal Reserve that she was "looking forward" to hiking U.S. rates.
European stocks were up 0.7 percent near 3-month highs and the euro was at a 7-1/2-year low, with Draghi expected to expand the European Central Bank's money-printing programme later and hike the cost for banks that hoard cash.
It followed a fresh spurt by the dollar overnight that had sent gold sliding to a new 5-1/2-year low and other commodity and emerging markets tumbling back again.
Those moves were triggered by Federal Reserve chief Janet Yellen when she said on Wednesday that raising U.S. rates, something the Fed is expected to do for the first time in nearly a decade on Dec. 16, would be proof of the economy's recovery.
"When the Committee begins to normalize the stance of policy, doing so will be a testament ... to how far our economy has come," she said, referring to the Fed's policy-setting committee. "In that sense, it is a day that I expect we all are looking forward to."
It left the focus firmly on the ECB's moves later and traders wondering whether whatever comes out of Frankfurt will be able to offset the impact of higher Fed interest rates, which tend to drive borrowing costs globally.
"Draghi is going to have to keep doing what he can," said Didier Saint-Georges, managing director of fund manager Carmignac.
"But the impact of central banks is meeting the wall of diminishing returns... so he will have to do more and more and more, and even then it won't have the same effect."
The ECB will announce its decision on rates at 1245 GMT and any new bond buying plans at its 1330 GMT news conference.
Money markets are pricing in a cut of at least 10 basis points in the ECB deposit rate to minus 30 basis points, while economists in a Reuters poll expect an increase in asset buying to 75 billion euros a month from 60 billion euros.
The sky-high expectations left short-term German yields pinned near record lows in deep negative territory. Longer-dated 10-year yields were marginally higher across the region though, having been dragged up by Yellen and U.S. yields.
The euro fell 0.6 percent to $1.0553, while the dollar index, which measures the greenback against six top world currencies, was hovering just below a 12-1/2-year high of 100.51 it had hit overnight.
Wall Street futures pointed to a spritely 0.6 percent rise for the S&P 500 when it resumes, although that would be merely taking back some of the near 1 percent lost during Wednesday's volatility.
Those falls had weighed on Asia overnight. MSCI's main regional index fell 0.4 percent as shares in South Korea, Hong Kong Australia Malaysia and Singapore dropped and as Tokyo's Nikkei ended flat.
One of the few clear emerging market currency risers of the day was Brazil's real.
News that the country's parliament had launched impeachment proceedings against President Dilma Rousseff cheered investors who have been critical of her handling of Latin America's biggest economy, now deep in recession.
"Brazil is probably the biggest concern among emerging market countries at the moment, similar to the way that Russia was regarded a year ago," said UBS strategist Manik Narain, adding the market's view was that impeachment could pave the way for greater reforms in Brazil.
In commodities, oil bounced as much as $1 on bargain hunting following its tumble overnight and following a report that Saudi Arabia will propose at Friday's OPEC meeting that the group cuts output by 1 million barrels a day next year.
U.S. crude was up 1.6 percent at $40.58 a barrel after dropping 4 percent overnight, with Brent up more than 2 percent at $43.40.
But metals were down on global oversupply, shrinking Chinese demand and the stronger dollar.
Spot iron ore prices have been plumbing 10-year lows this week. Copper on the London Metal Exchange was down 0.7 percent at $4,527 a tonne and heading back towards a 6-year low.
Additional Reporting by Shinichi Saoshiro in Tokyo and Karin Strohecker in London; Editing by Mark Trevelyan