RPT-U.S. rates futures turn higher after Fed statement

(Repeats to chain story to news alert with no change to headlines or text)

NEW YORK Nov 4 (Reuters) - U.S. short-term interest rates futures turned higher on Wednesday, paring earlier losses, after the Federal Reserve pledged it will hold rates near zero for an "extended" period.

The reversal in futures implied traders trimmed bets that the central bank is preparing to step back from its ultra loose policy in the coming months.

There has been speculation the Fed may be ready to tighten policy to forestall inflation as the U.S. economy seems to be emerging from the worst recession in 70 years.

Federal funds futures for July 2010 delivery FFMO were up 1.5 ticks, swinging from a 1.5 tick fall shortly before the FOMC statement.

The December fed fund FFZO was up 0.5 tick, compared with a 2 tick decline ahead of the Fed's low-rate pledge.

(Reporting by Richard Leong) ((richard.leong@thomsonreuters.com ; +1 646 223 6313; Reuters Messaging: richard.leong.reuters.com@reuters.net ))