GLOBAL MARKETS-Global shares rally, U.S. flat after Fed keeps stimulus
* Fed jolts by not tapering in protest against higher market rates * Overseas shares rally, but U.S. stocks show little follow-through * Bonds yields drop in Japan, Germany; dollar lower vs euro By Ryan Vlastelica NEW YORK, Sept 19 (Reuters) - World shares rose on Thursday, a day after the U.S. Federal Reserve unexpectedly delayed plans to cut back on its massive stimulus program. The news was announced before the close of U.S. markets on Wednesday, sending Wall Street to new highs. While major indexes showed little follow-through on Thursday, markets that were closed at the time of the statement - including in Europe and Asia - surged. Investors celebrated the prospect of continued stimulus in the world's largest economy, even though the reasons behind it were concerns about the strength of U.S. recovery. The Fed also cut its growth expectations for both 2013 and 2014. MSCI's world share index, which tracks 45 countries, jumped 1 percent to a fresh five-year high as large gains in Asian markets were followed by a 0.5 percent rise in Europe's shares. The Dow Jones industrial average was down 17.81 points, or 0.11 percent, at 15,659.13. The Standard & Poor's 500 Index was down 0.25 points, or 0.01 percent, at 1,725.27. The Nasdaq Composite Index was up 2.40 points, or 0.06 percent, at 3,786.04. "After the substantial move yesterday and people digesting the fact that tapering is put on hold, I don't expect a big move today," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio. The chance that U.S. interest rates could stay low for longer was further raised by news from the White House that noted dove Janet Yellen was the front-runner to take over the Fed when Ben Bernanke steps down in January. "The bottom line is that the (Fed) meant to send an extremely dovish message, not only through the lack of tapering, but also with its 2016 forecasts," analysts at Barclays wrote, adding that they not expected the first rate hike to occur in June 2015 rather than March of that it. The prospect of delayed rate hikes helped emerging markets, which have been suffering as higher yields in the rich world attracted away much-needed foreign capital. The main emerging market stock index jumped 2.5 percent. The Turkish lira and Indian rupee leapt while Indonesia's main stock index climbed 4.7 percent. Australian shares jumped 1.1 percent and Japan's Nikkei added 1.8 percent. "Markets are thrilled, and much needed reprieve for battered EM investors is on its way," said Frederic Neumann, co-head of Asian economics research at HSBC. "With Chinese data having turned up, and the Bank of Japan running at full speed, it looks like Asia might get its mojo back." FED PROTEST The Fed's decision to keep its asset buying at $85 billion a month was seen as a rebuff to the sharp rise in Treasury yields over recent months, which was proving a headwind for the housing market and the U.S. economy in general. Ten-year Treasury bonds fell 12/32 in price, with the yield at 2.7336 percent. Overseas, Japanese debt yields dropped to four-month lows while in Europe German Bunds went as low as 1.827 percent after their biggest drop in yields in over a year. The market's pushing back of the likely first hike in U.S. rates into 2015 sent the dollar tumbling across the board. The euro was up at $1.3545 as U.S. traders turned up for work, having already gained 1.2 percent on Wednesday to its highest in almost eight months. Against a basket of currencies, the dollar was flat, recovering from earlier losses of more than 1 percent. The index previously hit its lowest since February. In the commodities market, Brent crude fell 0.9 percent to $109.62 per barrel, while U.S. crude futures slid 0.3 percent. Gold was little changed. Oil prices dropped after Iran's president said his country was not seeking war with any other nation, helping unwind a risk premium and foster speculation of a recovery in oil exports to the West.