* MSCI Asia-ex Japan dips 0.8 pct

* Fed minutes help revive prospects of a June rate hike

* Dollar index hovers near 7-week high

* Commodities hit by a stronger dollar

By Saikat Chatterjee

HONG KONG, May 19 (Reuters) - Asian stocks fell and the U.S. dollar stood tall on Thursday as markets scrambled to factor in the possibility of another interest rate increase by the Federal Reserve as early as June. Gold stumbled.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8 percent in early trade as the prospect of a second U.S. rate hike in six months raised concerns for emerging markets already grappling with a slowing China.

South Korea and Australia led regional markets lower with 0.5 and 0.6 percent falls each as investors refocused their attention on the growing differences between the health of the world's biggest economy and its global counterparts.

"In the short term, emerging markets are the most vulnerable," Steven Englander, global head of G10 FX strategy at Citibank wrote in a note to clients.

"Overall, the divergence trade is revived until further notice," he wrote in a note to clients, saying the Canadian dollar and the Aussie were vulnerable due to concerns around those economies.

Japan's Nikkei rose early thanks to a weaker yen, which fell to a three-week low against the dollar after minutes of the last Fed meeting suggested a rate increase is firmly on the table at its policy review next month. But the Nikkei later pared its gains to just 0.2 percent.

The Fed minutes noted Fed officials said it would be appropriate to raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment.

Such views helped revive the prospect of a rate hike in June, which had been dismissed by many investors.

CME fed fund futures showed that the probability of a June rate increase by the Fed rose to 34 percent after the release of the FOMC minutes on Wednesday from 19 percent earlier in the day, 15 percent on Tuesday, and less than 1.0 percent a month ago, according to CME group's FedWatch.

Still, many in the market are still sceptical the Fed would raise rates ahead of Britain's June 23 referendum on whether to remain in the European Union, a risk that was pointed out by some Fed policymakers. July may be a stronger possibility.

The dollar index hovered just below a seven-week high of 95.27 scaled overnight, boosted by sharply higher U.S. Treasury yields.

The benchmark 10-year Treasury note yield jumped more than 10 basis points on Wednesday while the yield curve steepened slightly, breaking a multi-month streak of flattening.