Wall Street up on Fed, dollar down for second day

By Ryan Vlastelica

NEW YORK (Reuters) - Wall Street stocks were widely higher on Thursday while the U.S. dollar fell a day after the Federal Reserve signalled that interest rates would rise more slowly than many had expected.

While Greece continued to move closer to defaulting on loans, pressuring equities in Europe, so-called risk assets like stocks and commodities were largely higher on the day.

On Wednesday, the Fed said that the economy was probably strong enough to support a rate increase this year. But it lowered its forecasts for 2015 growth and reduced its federal funds rate forecast.

Analysts are torn on whether the first rate hike in nearly a decade will come in September or December, but the comments indicated that no matter when the first one occurred, the move would not be aggressive.

"Gradualism for rate increases is a soothing message for the market," said Alan Gayle, senior investment strategist and director of asset allocation at RidgeWorth Investments in Atlanta. "September remains on the table, but the downward drift in the forecasts for next year means the increases will happen gradually, and that's a relief for investors."

The Dow Jones industrial average rose 161.38 points, or 0.9 percent, to 18,097.12, the S&P 500 gained 16.25 points, or 0.77 percent, to 2,116.69 and the Nasdaq Composite added 55.85 points, or 1.1 percent, to 5,120.73.

The benchmark 10-year U.S. Treasury note fell 14/32 in price, pushing the yield up to 2.3542 percent. The U.S. dollar index, which measures the greenback against a basket of currencies, fell 0.5 percent. The dollar fell 0.3 percent against the yen.

The International Monetary Fund dashed any hope that Greece could avert default if it fails to repay a 1.6 billion euro loan by the end of June, piling pressure on leftist Prime Minister Alexis Tsipras, who showed no sign of yielding to creditors' demands.

"Greece is the best drama on TV right now, and we put the odds of a successful resolution at no better than a coin toss," Gayle said. "Clearly this has the potential to really increase near-term volatility."

The uncertainty pressured European markets. While the MSCI International ACWI Price Index rose 0.8 percent on the day, the pan-European FTSEurofirst 300 index fell 0.2 percent. The euro rose 0.6 percent.

Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 percent, while Japan's Nikkei skidded 1.1 percent to a one-week low as the yen gained against the dollar.

In commodities, oil rose on the back of the weaker dollar. Brent crude rose 0.5 percent to $64.19 a barrel and U.S. crude rose 0.5 percent to $60.23.

Spot gold prices popped 1.4 percent while silver was up 1.5 percent. Copper fell 0.1 percent and was on track for its fourth straight daily decline.

(Editing by Nick Zieminski)