US STOCKS-Wall St extends gains following Fed statement

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* Indexes: Dow up 1.3%, S&P up 1.2%, Nasdaq up 1.2% (Updates to after Fed statement)

By Caroline Valetkevitch

NEW YORK, Sept 22 (Reuters) - U.S. stocks added to gains on Wednesday after the Federal Reserve cleared the way to ease monthly bond purchases "soon" and signaled interest rate increases may follow more quickly than expected.

Overall indicators in the economy "have continued to strengthen," the Fed said in its latest statement.

Stocks were already sharply higher before the news from the Fed, with stocks bouncing back as concerns eased over a default by China's Evergrande.

Strategists said the Fed's news was mostly in line with what investors were expecting.

"Across the board it's exactly what we were expecting. The Fed took another step towards a formal taper announcement, and that's probably going to come at the next meeting or two," said Tom Garretson, senior portfolio strategist at RBC Wealth Management in Minneapolis.

The Dow Jones Industrial Average rose 450.75 points, or 1.33%, to 34,370.59, the S&P 500 gained 52.85 points, or 1.21%, to 4,407.04 and the Nasdaq Composite added 169.59 points, or 1.15%, to 14,915.98.

Stocks rose earlier after Evergrande's main unit said it had negotiated a deal with bondholders to settle interest payments on a domestic bond, calming fears of an imminent default that could unleash global financial chaos.

Advancing issues outnumbered declining ones on the NYSE by a 5.45-to-1 ratio; on Nasdaq, a 3.01-to-1 ratio favored advancers.

The S&P 500 posted five new 52-week highs and eight new lows; the Nasdaq Composite recorded 45 new highs and 55 new lows.

(Reporting by Caroline Valetkevithc; additional reporting by Stephen Culp in New York, and Ambar Warrick and Medha Singh in Bengaluru; Editing by Maju Samuel and Lisa Shumaker)

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