FOREX-Dollar slides after FOMC, yen pressured on BOJ

* Dollar index hits 6-week low after FOMC

* Yen erases initial gains after BOJ eases as expected

* Canada dollar hits 20-month high vs U.S. dollar

(Adds quotes, details; updates prices)

By Tamawa Desai

LONDON, March 17 (Reuters) - The dollar was under pressure on Wednesday after the U.S. Federal Reserve held to its pledge to keep interest rates low for an "extended period" while the yen slipped after the Bank of Japan eased policy.

The yen initially rose, skimming 90 yen to the dollar, on disappointment the Japanese central bank had not been more aggressive in relaxing policy but it later swung lower to 90.67 yen, according to electronic trading platform EBS.

The Fed and BOJ moves supported risk assets. Wall Street hit fresh 17-month highs and Tokyo's Nikkei average rose to an 8-week closing high. European shares .FTEU3 followed suit, with the FTSEurofirst 300 hitting its highest in two months.

A rise in oil prices boosted commodity-linked currencies including the Canadian dollar CAD=D4, which rallied to a 20-month high versus its U.S. counterpart.

"Major central banks have indicated they would refrain from tightening policy in the near term, which should support risk assets," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.

"The Fed is in no great hurry to raise rates, while the BOJ will likely continue to come under pressure to ease further."

By 1045 GMT, the dollar index .DXY, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.2 percent on the day at 79.579, having slipped to a six-week low of 79.520 in early European trade.

Dollar bulls were disappointed nobody joined Kansas City Fed President Thomas Hoenig in dissenting from the Fed's "extended period" language, as the central bank held interest rates essentially at zero.

The euro edged up 0.1 percent to $1.3780 EUR=, having hit a five-week high of $1.3819 on electronic trading platform EBS, buoyed by easing sovereign risk concerns after Standard and Poor's removed Greece's ratings from review for downgrade.

The dollar was up 0.3 percent at 90.64 yen JPY= against a broadly weaker Japanese currency.

The BOJ's move was widely flagged, although it left the duration of fixed-rate loans to banks unchanged at three months and two of its seven-board members dissented.

BOJ Governor Masaaki Shirakawa said the liquidity operation was not aimed at affecting exchange rates. Some in the market speculate Japanese authorities want to stem yen strength.

There was also technical support for the dollar near 90.00 yen, stemming from the tenkan line in an Ichimoku cloud formation and from the 100-day and 30-day moving averages which come in at about 90.12 yen and 90.00 yen, respectively.

CANADA DOLLAR SHINES

Against the Canadian dollar, the U.S. unit fell as low as C$1.0115 CAD=D4, its weakest since July 2008, as the Canadian currency extended gains on the back of higher oil prices and a recent batch of strong economic data.

Analysts expect the Canadian dollar to rally further on speculation strong fundamentals may prompt the Bank of Canada to raise interest rates from 0.25 percent in coming months, which would raise the currency's yield advantage over the U.S. dollar.

"Canadian rates are likely to be higher than U.S. ones by December, so rate differentials will help the Canadian dollar," said Kenneth Broux, market economist at Lloyd's in London.

He expected the Canadian dollar to hit parity with its U.S. counterpart in the near term.

Sterling GBP=D4 jumped to $1.5382, its strongest against the dollar in nearly three weeks after the number of Britons claiming unemployment benefit in February fell. [ID:nONS004866]

Minutes from the Bank of England's policy meeting earlier this month showed board members voted unanimously not to extend quantitative easing, which also boosted the pound.

(Additional reporting by Naomi Tajitsu)