GLOBAL MARKETS-Asia shares hold near 14-mth peak on Fed relief, JGB yields fall

* Asian shares steady but near 14-month high

* U.S. S&P enjoys biggest 2-day rally in 2 months

* Global bond yields at 2-week low

* JGB yields drop as market tests BOJ's new policy scheme

* European shares seen little changed

By Hideyuki Sano

TOKYO, Sept 23 (Reuters) - Asian shares held near 14-month highs on Friday as investors restored bets the Federal Reserve is settling into a phase of very gradual interest rate rises, while Japanese bond yields fell after the Bank of Japan's radical new policy scheme.

MSCI's broadest index of Asia-Pacific shares outside Japan ticked up 0.15 percent, driven by gains in Australia, and within sight of its highest levels since July 2015 that it hit in early September.

Japan's Nikkei dipped 0.3 percent, reflecting the yen's gains during Japan's market holiday on Thursday.

European share are seen opening little changed, with speadbetter picking a 0.1 percent fall in Britain's FTSE and 0.1 percent rise in Germany's DAX.

On Wall Street, the S&P 500 Index gained 0.65 percent, led by a 1.9-percent gain for the real estate sector .

The S&P 500 capped its best two-day performance in more than two months, while the Nasdaq closed at a record high.

The rallies began after the Fed on Wednesday maintained the low-interest rate environment that had helped underpin the bull market for stocks since the global financial crisis in 2008.

"Because the Fed is shying away from tightening, there will be liquidity sloshing around in the world's financial markets as well for another few months," said Tatsushi Maeno, senior strategist at Okasan Asset Management.

Fed Chair Janet Yellen did say U.S. growth was looking stronger and rate increases would be needed to keep the economy from overheating and fueling high inflation.

But that hardly changed the market's perception on the outlook of the Fed's policy, with interest rate futures <0#FF:> pricing in roughly a 60 percent chance of a rate increase by December, little changed from before the Fed meting.

Crucially, the Fed also projected a less aggressive rise in rates next year and in 2018, fanning expectations bond yields will stay low in the foreseeable future.

"Fed officials have downgraded their forecasts for rate hikes in their projections. The Fed's meeting has confirmed that low interest rates will last longer than previously thought," said Shuji Shirota, head of macro economic strategy at HSBC in Tokyo.

The 10-year U.S. Treasuries yield dropped to as low as 1.608 percent, down sharply from Wednesday's high of 1.738 percent and hitting its lowest level in almost two weeks.

The German Bunds yield also fell about 10 basis points to minus 0.093 percent from plus 0.005 percent on Wednesday.

The 10-year Japanese government bond yield fell 2.5 basis points to minus 0.055 percent while the 30-year yield fell 4.0 basis points to 0.470 percent, hitting a two-week low of 0.450 percent at one point.

The BOJ said on Wednesday it would seek to guide the 10-year JGB yield around zero percent in an unprecedented move, but investors were left wondering exactly where and how the BOJ would be able to exert control on the bond yield.

Many market players think long-term bond yields are likely to fall if the BOJ continues the current pace of massive bond buying.

In the currency market, the dollar was softer on the Fed's policy outlook, with the dollar's index against a basket of six major currencies slipping to its lowest level in nearly two weeks on Thursday.

The index last stood at 95.510, off Thursday's low of 95.048 but down 0.5 percent on the week.

The euro fetched $1.1197, recovering from Wednesday's three-week low of $1.1123.

The yen stepped back to 100.91 on the dollar from a four-week high of 100.10 touched on Thursday after Japan's top currency diplomat warned Tokyo will take action if needed.

Oil prices eased after two days of strong gains on caution ahead of a gathering of OPEC ministers next week in Algeria to discuss possible production cooperation to rein in global oversupply

Brent crude futures traded at $47.27 per barrel, after having climbed to a two-week high of $47.83 on Thursday.

Elsewhere, copper also ticked down after having rallied to a six-week high despite worries about slow demand growth, supported by the Fed's policy. It last traded at $4,838.0 per tonne, after having risen to as high as $4,858.5 on Thursday. (Editing by Shri Navaratnam and Jacqueline Wong)

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