* Putin says Russia does not want further Ukraine split
* Start of two-day Fed meeting keeps volumes light
* Microsoft shares rally 4 pct, lead S&P 500
* Yuan falls against the dollar on problems in China
By Angela Moon
NEW YORK, March 18 (Reuters) - Major world equity markets rose on Tuesday while the safe-haven yen pared gains after President Vladimir Putin, while approving plans to make Crimea part of Russia, said he did not want to split Ukraine.
The remarks eased concerns that tensions over Ukraine might escalate, driving down assets typically sought in times of tension. The price of gold fell and yields on low-risk government bonds, which move inversely to the price of bonds, rose.
Wall Street rose for a second straight day, with the benchmark S&P 500 moving within 1 percent of its record high.
Gains were broad, with all 10 primary S&P 500 sectors higher. Prices were also boosted after the latest economic data showed consumer prices rose 0.1 percent in February, as expected, while housing starts rose modestly from the previous month.
Shares of Microsoft Corp surged 4.1 percent to $39.61, making the stock the S&P 500's biggest percentage advancer. It was the biggest daily advance for the software giant since November, and the move took the stock near $40 a share for the first time since July 2000.
Late Monday, a source familiar with the matter told Reuters that Microsoft may unveil an iPad version of the company's Office software suite on March 27.
The MSCI All-World Index of global equities rose 0.7 percent.
Trading volumes are expected to be low as investors await the U.S. Federal Reserve's policy decision on Wednesday at the close of the central bank's two-day meeting.
Putin signed an order approving a draft treaty on "adopting the Republic of Crimea into the Russian Federation." In a speech to a joint session of parliament, he defended the weekend referendum in Ukraine's Crimea region in which voters overwhelmingly said they wanted to join Russia.
After Sunday's vote, the United States and the European Union imposed sanctions on a small group of Russian and Crimean officials. However, the worst fears of financial markets that the referendum would lead to violence were not realized.
"What had been going on in the Ukraine has been weighing on the minds of investors for a while, so it is a relief that we are apparently moving beyond this," said Joseph Tanious, global market strategist at J.P. Morgan Asset Management in New York.
Russia's stock market, hammered in the run-up to the vote, rose 1.9 percent, though the rouble edged down to 36.32 to the dollar.
The FTSEurofirst 300 of top European shares gained 1 percent, reversing earlier losses after Putin's comments. Japan's Nikkei stock average ended up 0.9 percent, recovering from Monday's six-week closing low.
The yen gained 0.2 percent against the dollar, to 101.57 yen, well below peaks around 101.20 hit last week. The euro was steady at $1.3905, not far from a two-and-a-half-year high around $1.3967 touched on Thursday.
FED COULD ADJUST POLICY THRESHOLD
The Fed meeting, the first presided over by Chair Janet Yellen, is not likely to surprise. It is widely expected that the U.S. central bank will continue to reduce its monthly bond-buying stimulus, bringing it down this time to $55 billion, as it removes the extraordinary monetary policy that has kept interest rates low for years.
"The Fed has to acknowledge that the transitory factors are more entrenched since inflation has run below their target for about two years," said Michael Hanson, a senior economist at Bank of America Merrill Lynch in New York.
Policymakers could adopt less specific language to describe conditions under which it might tighten policy, instead of the bank's current 6.5 percent unemployment rate threshold. The jobless rate stands at 6.7 percent and has been falling rapidly, though Fed officials are still signaling that interest rates need to stay low to support the economy.
China's yuan fell against the dollar on China's problems with a slowing economy and heavily indebted corporate sector. Spot yuan traded at 6.1920 to the dollar, compared with 6.1781 at Monday's close.
German 10-year government bond yields, the euro zone benchmark, edged up to 1.577 percent. Yields on U.S. 10-year Treasuries, which rose on Monday after the U.S. data, were steady at 2.697 percent.
Spot gold traded at $1,355.33, after hitting a six-month high of $1,391.76 on Monday before profit-taking kicked in.
Brent crude oil rose to $106.25 a barrel on the reduced Ukraine tensions as bargain hunters stepped in after prices fell more than $2 on Monday.