* Gold hits 4th high in row as Fed inches nearer to action
* Dollar slips on Fed statement; euro rides to 6-week high
* Oil falls amid high inventories, Fed's economic outlook
* Stock gains fade, bonds jump as Fed nears more easing (Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Sept 21 (Reuters) - Gold prices hit new highs on Tuesday on inflation fears after the Federal Reserve inched closer to boosting money supply to spur the struggling U.S. economy, a potential move that led stocks' rise to fade.
The dollar fell sharply against the yen and euro after the Fed suggested it stood ready to further stimulate the U.S. economy, raising fears it may print more dollars to do so. For details see: [ID:N21196497]
The yen shot through the 85 level for the first time since Japan intervened to weaken the currency last week, while the euro surged to a six-week high against the dollar to break above its 200-day moving average for the first time since January.
The December futures contract for Japan's Nikkei 225 stock index <0#NK:>, which trades in Chicago, was down 140 points at 9,575.
Stocks initially popped higher but gave back their gains as investors who had hoped that with recent improvements in economic data, the Fed would issue a more upbeat outlook or clarify the measures it would take to stimulate demand.
With the S&P 500 up about 9 percent this month, investors are conflicted as to whether any move by the Fed would be enough to put the economy on a more sustainable growth path.
"One interpretation would be that things are deteriorating and therefore they need to do more. On the other hand, the favorable aspect of it would be they're going to print more money to boost asset prices," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
World stocks, as measured by MSCI <.MIWD00000PUS>, initially rebounded after the Fed statement but then fell 0.2 percent.
U.S. indexes were mixed, with the Dow edging higher.
The Dow Jones industrial average <.DJI> closed up 7.41 points, or 0.07 percent, at 10,761.03. The Standard & Poor's 500 Index <.SPX> was down 2.93 points, or 0.26 percent, at 1,139.78. The Nasdaq Composite Index <.IXIC> was down 6.48 points, or 0.28 percent, at 2,349.35.
Crude oil prices fell for a fifth session in six days, wilting amid high oil inventories and the Fed's continued concern about a sluggish economic recovery. [ID:nSGE68K06B]
Crude futures extended losses on the Fed statement just before the close of oil's open-outcry trading session in New York.
The October U.S. crude contract, which expired on Tuesday, helped keep pressure on other oil contracts.
U.S. crude contract for October
U.S. November crude
In London, ICE Brent for November
U.S. Treasury prices rallied after the Fed signaled it was open to more easing, driving the yield on two-year government notes to a series of record lows on expectations short-term rates will stay near zero longer than previously thought.
The price on two-year notes
Benchmark 10-year notes
The euro
Against the yen, the dollar
The dollar was down against a basket of major currencies, with the U.S. Dollar Index <.DXY> down 1.10 percent at 80.443.
Gold rallied on the prospect of further Fed action to prevent prices from falling. Investors were prompted to buy bullion as a hedge against both economic uncertainty and inflation.
Gold reversed early losses to rise to a record $1,290.70 an ounce.
U.S. gold futures for December delivery