* Fed holds rates steady, signals cuts possible later this year
* MSCI global stocks index rises, Wall Street indexes up
* Fed decision comes after ECB's Draghi hints at stimulus
* Dollar, benchmark U.S. yields drop (Recasts throughout to reflect Fed decision)
By Lewis Krauskopf
NEW YORK, June 19 (Reuters) - A gauge of global stock markets added to gains on Wednesday and benchmark U.S. Treasury yields and the U.S. dollar fell after the U.S. Federal Reserve signaled possible rate cuts of as much as half a percentage point over the remainder of this year.
The U.S. central bank held interest rates steady and said it "will act as appropriate to sustain" the economic expansion as it approaches the 10-year mark and dropped a promise to be "patient" in adjusting rates.
The market expects the Fed could cut rates as soon as next month.
"I think it’s right in line with market expectations, puts a July cut in play,” said Brett Ewing, chief market strategist at First Franklin Financial Services in Tallahassee, Florida.
Investors' hopes that the Fed would soon cut interest rates had been fueled on Tuesday when European Central Bank President Mario Draghi hinted at economic stimulus, comments that drove up stocks and weakened yields.
"We think the Fed delivered," said John Augustine, chief investment officer at Huntington National Bank in Columbus, Ohio. "It did no harm. It walked right up to a cut without doing it today. It'll likely be coming in July, absent some big trade news or other news."
MSCI's gauge of stocks across the globe gained 0.66%.
On Wall Street, the Dow Jones Industrial Average rose 50.53 points, or 0.19%, to 26,516.07, the S&P 500 gained 5.91 points, or 0.20%, to 2,923.66 and the Nasdaq Composite added 8.02 points, or 0.1%, to 7,961.91.
The pan-European STOXX 600 index was little changed.
Benchmark 10-year U.S. notes last rose 5/32 in price to yield 2.0422%, from 2.058% late on Tuesday.
The dollar index, which measures the greenback against a basket of currencies, fell 0.54%, with the euro up 0.51% to $1.1248.
U.S. crude fell 0.22% to $53.78 per barrel and Brent was last at $61.82, down 0.51% on the day.
Additional reporting by Sinéad Carew, Gertrude Chavez-Dreyfuss in New York and Sujata Rao in London; Editing by Hugh Lawson, Jonathan Oatis and Lisa Shumaker