* US shares flat, rally pauses as Fed easing contemplated
* Asia, emerging stocks help MSCI world equity index
* Dollar hits 5-month low vs euro; gold set record high
By Al Yoon and Natsuko Waki
NEW YORK/LONDON, Sept 22 (Reuters) - The dollar hit a five-month low against the euro and a three-week rally in global shares slowed after the Federal Reserve opened the door to more monetary easing, signaling the depth of its concern over weak growth.
Gold hit record highs on the prospect of more U.S. stimulus and a weaker dollar, while prospects of more cash flowing through the system boosted shares and currencies in developing economies that are outperforming Europe and the United States.
The Fed on Tuesday said it stood ready to pump new dollars into the economy -- a second round of so-called quantitative easing. It made no policy shift but the statement was more explicit than those from previous meetings, analysts said.
European stocks fell and Wall Street shares stood little changed as investors were torn between expectations for Fed help and the message of a faltering economic recovery. They were also uncertain if moves by the Fed would be enough to ward off recession.
"The Fed's policy statement was the strongest hint yet that increased policy easing ... will be implemented if upcoming economic indicators continue to point to a recovery that is losing momentum," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange Inc in Washington.
The Dow Jones industrial average <.DJI> was down 7.03 points, or 0.07 percent, at 10,754.00. The Standard & Poor's 500 Index <.SPX> fell 2.76 points, or 0.24 percent, at 1,137.02. The Nasdaq Composite Index <.IXIC> was off 13.11 points, or 0.56 percent, at 2,336.24.
The FTSEurofirst 300 index <.FTEU3> fell 0.3 percent, recovering some earlier losses, while firmer Asian and other emerging market shares boosted the MSCI world equity index <.MIWD00000PUS> 0.7 percent. Emerging market stocks <.MSCIEF> rose 0.6 percent.
The Thomson Reuters global stock index <.TRXFLDGLPU> gained 0.4 percent.
Investors' major concern in Europe remains the level of
government debt and persistent worries about Ireland's fiscal
deficit pushed the spread of its 10-year bond yield over German
Bunds to euro lifetime highs of 425 basis points
The Portuguese spread
The dollar <.DXY> fell 1 percent against a basket of major
currencies. The euro rose as high as $1.3440
The sliding dollar helped gold
"It looks like the hurdle for (quantitative easing) has been lowered and the Fed is more concerned about the inflation picture," said Nick Stamenkovic, rate strategist at RIA Capital, who added that the Fed may act as early as November.
Yields on benchmark U.S. Treasuries fell to their lowest levels in three weeks as prices extended a rally from Tuesday when the Fed raised prospects of more quantitative easing. This easing could be in the form of Treasury bond purchases, some economists said.
The yield on the benchmark 10-year Treasury note declined 0.04 percentage point to 2.54 percent. (Additional reporting by Joanne Frearson and Amanda Cooper in London and Vivianne Rodrigues in New York, Editing by Chizu Nomiyama)