Updated prices at 2:48 ET/ 1848 GMT

By Sinéad Carew

NEW YORK July 31 (Reuters) -MSCI'S global equities index added to gainson Wednesday and the dollar slightly pared losses after the U.S. Federal Reserveheld interest rates steady but opened the door to reducing borrowing costs as soon as September.

Treasury yields pared losses after a Fed statement in line with market expectations. The central bank noted further progress towards its 2% inflation objective and said the economy "continued to expand at a solid pace," while job gains moderated and the unemployment rate "remains low."

Investors had priced in unchanged rates and a strong signal that rate cuts could begin in September from the Fed, which has kept its policy rate in the 5.25%-5.50% range for the past year.

"It's certainly what the market expected which is the right thing for the Fed to do, to sit tight," said Don Calcagni, chief investment officer at Mercer Advisors in Denver, Colorado.

Citing easing inflation and unemployment ticking up, Calcagni said "if you were going to make a case to cut rates, those are the data points you better cite in order to manage market expectations."

On Wall Street at 02:48 p.m. the Dow Jones Industrial Average .DJI rose 386.22 points, or 0.95%, to 41,129.55, the S&P 500 .SPX gained 106.22 points, or 1.95%, to 5,542.66 and the Nasdaq Composite .IXIC gained 494.53 points, or 2.88%, to 17,641.95.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 14.95 points, or 1.87%, to 816.38. Earlier Europe's STOXX 600 .STOXX index had closed up 0.8%.

InU.S. Treasuries, longer-dated U.S. Treasury yields pared declines but were still slightly lower while shorter-duration debt rose after the Fed statement.

The yield on benchmark U.S. 10-year notes US10YT=RR fell 3.2 basis points to 4.109%, from 4.141% late on Tuesday. The 30-year bond US30YT=RR yield fell 3.6 basis points to 4.3627% from 4.399% late on Tuesday.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations, fell 1.1 basis points to 4.3481%, from 4.359% late on Tuesday.

In currencies , the dollar pared losses slightly after the widely expected Fed statement.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, was down 0.33% at 104.11.

The euro EUR= was up 0.09% at $1.0825. Against the Japanese yen JPY=, the dollar weakened 1.49% to 150.49.

In energy, oil prices rebounded from seven-week lows after the killing of a Hamas leader in Iran ratcheted up tensions in the Middle East and a sharp drawdown in U.S. crude stockpiles.

U.S. crude CLc1 settled up 4.26% at $77.91 a barrel and Brent LCOc1 rose to $80.72 per barrel, up 2.66% on the day.

Gold prices were advancing on the day and were on track to register their biggest monthly percentage gain since March, led by geopolitical concerns and hopes of an interest rate cut in September as focus shifted to the U.S. Federal Reserve's upcoming policy decision.

Spot gold XAU= added 0.94% to $2,430.98 an ounce. U.S. gold futures GCc1 gained 1.04% to $2,430.00 an ounce.

Reporting by Sinéad Carew, Karen Brettell, Gertrude Chavez-Dreyfuss in New York and Tom Wilson in London; Additional reporting by Harry Robertson in London and Ankur Banerjee in Singapore; Editing by Gareth Jones and Nick Zieminski

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