(Updates market action after FOMC, adds quote)
* Fed holds rates unchanged, cites global, market
developments
* Dollar adds losses as traders pare rate-hike bets
* Oil gains after U.S. data shows spike in product demand
* Yields fall, curve steepens after dovish Fed statement
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 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.
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.
"I'd certainly say that the statement leans in the dovish
side of neutral, they walked back a few things that they had in
the December statement," said Art Hogan, chief market strategist
at Wunderlich Securities in New York.
U.S. interest rates futures implied traders see a 29-percent
chance the Fed would 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 showed a jump in
weekly demand for products such as heating oil when a cold front
hit the country. News Russia was discussing a possible pact with
OPEC pushed Brent prices above $33 a barrel.
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.
In late U.S. trading, the Dow Jones industrial average
.DJI was down 216.06 points, or 1.34 percent, to 15,951.17,
the S&P 500 .SPX was down 21.92 points, or 1.15 percent, to
1,881.71 and the Nasdaq Composite .IXIC was down 96.95 points,
or 2.12 percent, to 4,470.72.
Apple (O:AAPL) and Boeing's disappointing forecasts helped drag down
U.S. stock indexes.
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 0.5 percent at 98.878.
In the bond market, benchmark 10-year Treasury note yields
US10YT=RR fell to 2.00 percent, from 2.05 percent before the
statement.
Traditional safe-haven gold rose for a third straight day to
its highest level since early November, last up 0.6 percent at
$1,127.50 an ounce XAU= .