GLOBAL MARKETS-Shares up on eased Crimea tensions; bond yields edge lower
* Putin says Russia does not want further Ukraine split
* U.S. Federal Reserve to give statement Wednesday
* 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 after comments from Russian President Vladimir Putin soothed anxiety that tensions over Ukraine could escalate, while U.S. Treasuries yields edged lower ahead of the Federal Reserve's policy decision.
Putin on Tuesday signed 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.
Wall Street climbed for a second straight session following Putin's comments, with the S&P 500 within striking distance of its record.
Gains were broad, with nine of the 10 primary S&P 500 sector indexes higher for the day. An S&P technology sector index , up 1.4 percent, led the advance, buoyed by a rally in Microsoft Corp.
Microsoft shares jumped 3.9 percent to $39.55, the biggest daily advance for the software company's stock since November. Tuesday's move took the stock near $40 for the first time since July 2000.
Late Monday, a source familiar with the matter told Reuters the company may unveil an iPad version of the company's Office software suite on March 27.
The two-day advance of 1.7 percent marked the S&P 500's best back-to-back performance since early February. However, not all market participants were convinced that the relief over Ukraine would keep lifting equities.
"This is the triumph of hope over experience," said Brad McMillan, chief investment officer of Commonwealth Financial in Waltham, Massachusetts. "I would say investors should be very cautious. This doesn't seem to be a market that is trading on longer-term expectations or possibilities."
The Dow Jones industrial average rose 88.97 points or 0.55 percent, to 16,336.19, the S&P 500 gained 13.42 points or 0.72 percent, to 1,872.25 and the Nasdaq Composite added 53.364 points or 1.25 percent, to 4,333.313.
The MSCI All-World Index of global equities rose 0.7 percent.
The pan-European FTSEurofirst 300 index closed 0.7 percent higher at 1,306.11 points, recovering from an earlier session low of 1,290.28. It fell more than 5 percent in about one week from a near 5-1/2-year high earlier this month and is still down 1 percent this year after surging 16 percent in 2013.
In late New York trade, the euro held a small gain of 0.06 percent against the U.S. dollar at $1.3930, having briefly broken down to $1.3881.
The dollar fell to 101.41 yen, a loss of 0.34 percent against the Japanese currency.
FED COULD ADJUST POLICY THRESHOLD
The Fed is expected to continue to reduce the size of its monthly bond purchase program, but also alter its forward guidance when it gives its statement on Wednesday at the close of a two-day policy meeting. The meeting will be the first presided over by Fed Chair Janet Yellen.
"The message (Yellen) wants to convey is probably, 'We're still accommodative but we're still tapering, and we're flexible,' which is a very complicated message," said Kathy Jones, fixed income strategist at Charles Schwab in New York.
Traders said uncertainty over the outcome of the Fed meeting spurred some safe-haven demand for Treasuries.
The 10-year U.S. Treasury note was last up 7/32 in price to yield 2.67 percent, down slightly in yield from late Monday, when the yield was at 2.70 percent.
The 30-year U.S. Treasury bond was last up 5/32 in price to yield 3.62 percent, down slightly in yield from late Monday, when the yield was at 3.63 percent.
The Fed previously said that it would not raise interest rates until joblessness fell to at least 6.5 percent, a pledge that policymakers thought would hold until at least mid-2015. But that rate hit a five-year low of 6.6 percent in January, before rising to 6.7 percent in February.
The Chinese yuan deepened its month of losses against the greenback on more signs of problems with a slowing economy and a heavily indebted corporate sector. The yuan's weakness was seen as a benefit for the yen, helping lift it against the greenback. The yuan weakened to 6.1755 to the dollar versus Monday's close around 6.1580.
U.S. crude oil futures rose by more than $1 per barrel to the highest price in a week following strong gains in equities, which outweighed forecasts for another build in domestic supplies.
U.S. crude settled $1.62 higher at $99.70 per barrel. Prices had mostly fallen in recent weeks since touching a five-month high of $105.22 on March 3 when worries of war in Ukraine peaked, and settled 81 cents lower on Monday.