* Fed holds rates unchanged, cites global, market
developments
* Dollar adds to losses as traders pare rate-hike bets
* Oil gains after U.S. data, news on possible Russia-OPEC
pact
* U.S. yields turn flat, trim rise after dovish Fed
statement
(Updates after U.S. stock market close, adds quote)
By Richard Leong
NEW YORK, Jan 27 (Reuters) - Wall Street stocks and the
dollar fell on Wednesday as the Federal Reserve held U.S.
interest rates unchanged, as expected, and said it was closely
monitoring global economic and financial developments.
The Fed's more cautious outlook reduced the likelihood it
would raise rates by a quarter-point four times this year, which
hurt the greenback, but its latest assessment on the economy did
not wipe out the chances of a possible rate increase in March,
which disappointed some stock investors.
"The Fed did the right thing by not making any significant
changes, if they did come out and sound overly dovish I think
that would effectively shut the door on a March hike," said Tom
Porcelli, chief economist at RBC Capital Markets in New York.
The Fed's acknowledgement of risks to the domestic economy,
with oil prices hitting 12-year lows and jitters about Chinese
growth, revived some safe-haven bids for gold and U.S. Treasury
debt prices.
Oil futures clung to earlier gains, brushing off the Fed's
more cautious outlook since its December policy meeting when the
central bank raised rates for the first time in nearly a decade.
"The committee is closely monitoring global economic and
financial developments and is assessing their implications for
the labor market and inflation," the Federal Open Market
Committee, the Fed's policy-setting group said in a statement.
New Zealand's central bank also decided to leave local
interest rates unchanged but said more easing may be required
due to low inflation.
Analysts and investors said the statement signaled U.S.
policymakers have scaled back their view on the chances of a
rate hike at its next meeting in March.
U.S. interest rates futures implied traders see a 29 percent
chance the Fed will raise rates at its next policy meeting in
March, down from 31 percent late on Tuesday, according to CME
Group's FedWatch program.
Prior to the FOMC statement, U.S. stock prices were buoyed
by a rebound in crude prices following data showing a jump in
weekly demand for oil products and news Russia was discussing a
possible output pact with OPEC.
Brent oil LCOc1 settled up $1.30 or 4.09 percent at $33.10
a barrel, while U.S. crude futures CLc1 ended up 85 cents or
2.70 percent at $32.30 a barrel.
The Dow Jones industrial average .DJI fell 222.77 points,
or 1.38 percent, to 15,944.46, the S&P 500 .SPX declined 20.68
points, or 1.09 percent, to 1,882.95 and the Nasdaq Composite
.IXIC shed 99.51 points, or 2.18 percent, to 4,468.17.
Apple (O:AAPL) and Boeing's disappointing forecasts also helped drag
U.S. stock indexes lower.
Earlier on Wednesday, the pan-European FTSEurofirst 300
index .FTEU3 rose 0.4 percent at 1,340.76.
Chinese shares .CSI300 ended stronger, and Tokyo's Nikkei
.N225 finished 2.7 percent higher.
The dollar index .DXY , which gauges the greenback against
six currencies, was down 0.4 percent at 98.97.
The New Zealand dollar fell 1 percent against the greenback
NZD=D4 at $0.6431 following the Reserve Bank of New Zealand's
policy statement.
In the bond market, benchmark 10-year Treasury note yields
US10YT=RR fell to 2.00 percent from 2.05 percent before the
statement, ending little changed on the day.
Traditional safe-haven gold rose for a third straight day to
its highest level since early November, last up 0.46 percent at
$1,125.37 an ounce XAU= .