GLOBAL MARKETS-Stocks reverse losses, Treasury yields dip following remarks by Fed's Powell

* Gold slips, dollar advances

* Oil prices cool after Saudi production pledge

(Updates to market close)

By Stephen Culp

NEW YORK, Sept 18 (Reuters) - The S&P 500 and the Dow

reversed losses to close higher on Wednesday and U.S. Treasury

yields slipped after remarks by Federal Reserve Chair Jerome

Powell tempered the market's initial reaction to the U.S.

central bank's policy statement.

All three major U.S. stock indexes initially extended

earlier losses following the release of the Fed's policy

decision after the close of a two-day meeting, which dimmed

hopes for further rate cuts and fell short of the more

aggressive reduction in borrowing costs that President Donald

Trump had demanded.

The U.S. central bank, on a 7-3 vote, lowered the Fed funds

target rate to a range of 1.75% to 2.00% "in light of the

implications of global developments for the economic outlook as

well as muted inflation pressures," although it said the U.S.

economy continues to grow at a "moderate" pace and the labor

market "remains strong." But stocks reversed their slide during Powell's news

conference following the policy decision, during which he said

the Fed is closely monitoring economic data, trade and global

growth risks, but did not see imminent recession, or think the

central bank would cut rates to negative territory.

"This type of reaction we see almost every time from the Fed

decisions," said Rick Meckler, partner at Cherry Lane

Investments in New Vernon, New Jersey. "The first move is from

the people who think it's not enough, and at the end of the day

people conclude that they did exactly what investors expected

them to do. Those people who got what they expected used the

selloff to buy, and I think that's what happened here."

The Dow Jones Industrial Average .DJI rose 36.28 points,

or 0.13%, to 27,147.08, the S&P 500 .SPX gained 1.03 points,

or 0.03%, to 3,006.73, and the Nasdaq Composite .IXIC dropped

8.62 points, or 0.11%, to 8,177.39.

The MSCI world equity index .MIWD00000PUS , which tracks

shares in 47 countries, fell 0.06%.

U.S. Treasury yields dipped following Powell's remarks.

Benchmark 10-year notes US10YT=RR last rose 7/32 in price

to yield 1.7909%, from 1.814% late on Tuesday. The 30-year bond

US30YT=RR last rose 23/32 in price to yield 2.2471%, from

2.28% late on Tuesday.

The dollar strengthened following the Fed's rate cut.

The dollar index .DXY rose 0.28%, with the euro

EUR= down 0.36% to $1.1031.

The Japanese yen weakened 0.26% versus the greenback at

108.44 per dollar, while sterling GBP= was last trading at

$1.2483, down 0.14% on the day.

Oil prices edged lower after Saudi Arabia said it would

quickly restore full production following last week's attack on

its facilities and as U.S. crude stockpiles unexpectedly

increased. Tension in the Middle East remained elevated, however. Saudi

Arabia on Wednesday displayed remnants of what it described as

Iranian drones and cruise missiles used in the attack, calling

them "undeniable" evidence of Iranian aggression. Trump ordered

a major increase in sanctions on Iran on Wednesday, following

repeated U.S. assertions that Iran was behind the attack.

U.S. crude oil futures settled down 2.07% at $58.11 per

barrel, while Brent crude oil futures settled at $63.60 per

barrel, a 1.47% decline.

Spot gold reversed early gains after the Fed released its

statement. Spot gold XAU= dropped 0.6% to $1,492.81 an ounce.

Copper CMCU3 lost 0.27% to $5,805.00 a tonne.

Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

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