GLOBAL-MARKETS-Stocks hold firm, dollar slips as Fed holds rates steady

(Recasts, adds reaction to Fed comments)

* MSCI World index up 0.3%

* Fed holds rates steady but commentary less negative

* Dollar index down 0.3%

* 10-year Treasury yield slips

* Oil futures up 1%

* Graphic: Global asset performance

* Graphic: World FX rates


NEW YORK, April 28 (Reuters) - World shares stayed close to record highs while the dollar and Treasury yields slipped after the Federal Reserve held interest rates and its monthly bond-buying program steady, giving no sign it was ready to reduce its support for the recovery.

Investors had been anxiously waiting to see if the U.S. Federal Reserve would signal a tapering of its mass stimulus programme.

In a statement released after a two-day policy meeting the central bank did note progress on vaccines and economic recovery, a slightly less negative view than the Fed’s description in March.

“The Fed’s optimism has some concerned that tapering or higher rates may occur sooner than expected,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.

MSCI’s broadest index of world shares continued towards its best month of the year so far.

The index, which tracks shares in 49 nations, rose 1.46 points or 0.21 percent, to 707.

Some investors questioned whether gains are sustainable.

“You’re seeing an irrational exuberance with money chasing money. It seems like we could be setting ourselves up for a correction,” said Drew Horter, president and chief investment officer of Tactical Fund Advisors in Cincinnati.

The Dow Jones Industrial Average fell 164.05 points, or 0.48%, to 33,820.88, the S&P 500 lost 2.54 points, or 0.06%, to 4,184.18 and the Nasdaq Composite dropped 22.96 points, or 0.16%, to 14,067.26.

The pan-European STOXX 600 index ended largely unchanged, with bank stocks leading gains among the regional sectors. The subindex ended 1.5% higher.

The dollar was on course for its first unbroken two-day run of gains of the month - April is currently set to be its cruellest month since last July - before slipping back after the Fed statement.

The dollar index fell 0.232%, with the euro up 0.17% to $1.2111.

Benchmark 10-year notes last yielded 1.6129%, from 1.622% late on Tuesday.

Traders were also awaiting a packed schedule of U.S. corporate earnings after the bell and U.S. President Joe Biden’s first address before a joint Congress session, leaving them with plenty to navigate.

Biden will address Congress and is likely to underscore his administration’s plans for infrastructure and stimulus spending.

These developments would normally be positive for stocks, but analysts say so much economic optimism is already priced into the equity market that it is difficult to budge equities from current levels.


U.S. earnings later include tech and internet giants Apple , Facebook and Qualcomm, as well as Ford .

Facebook is expected to report a revenue rise due to online advertising demand during the COVID pandemic, while Apple is expected to post a more than 32% jump in revenue, driven by 5G phone demand.

Oil prices rose more than 1% after U.S. distillate inventories posted a large drawdown and refining activity picked up, boosting hopes for rising fuel demand.

Brent crude futures settled at $67.27 per barrel, up 1.3%. U.S. crude futures settled at $63.86 per barrel, up 1.5%.

Spot gold added 0.1% to $1,779.23 an ounce.

In the cryptocurrency market there was excitement as the European Investment Bank said it would sell a two-year digital bond worth 100 million euros ($120 million) on the ethereum blockchain network.

Rival cryptocurrency Bitcoin fell 0.4%.

($1 = 0.8278 euros)

Editing by Kirsten Donovan, Steve Orlofsky and Andrea Ricci