* Fed raises rates as expected; job gains stoke confidence
* Bond yields fall after Fed decision
* European focus also on Dutch elections (Updates with Fed decision, afternoon trading)
By Lewis Krauskopf
NEW YORK, March 15 (Reuters) - U.S. stocks added to gains, while Treasury yields fell and the dollar weakened on Wednesday, after the Federal Reserve raised interest rates for the second time in three months but did not flag any plan to accelerate the pace of monetary tightening.
The central bank's rate increase was spurred by steady economic growth, strong job gains and confidence that inflation is rising to the central bank's target. Investors had widely expected the rate increase.
But the Fed's policy-setting committee did not flag any plan to accelerate the pace of monetary tightening. Although inflation is "close" to the Fed's 2-percent target, it noted that goal was "symmetric," indicating a possible willingness to allow prices to rise at a slightly faster pace.
"The angst out there in the market was the Fed was going to come out swinging. There was none of that in the statement," John Canally, investment strategist and economist at LPL Financial in Boston. "The rate hike was priced in and we got it."
Markets could remain volatile as Fed Chair Janet Yellen holds a news conference starting at 2:30 pm EDT (1830 GMT).
The Dow Jones Industrial Average rose 96.65 points, or 0.46 percent, to 20,934.02, the S&P 500 gained 16.79 points, or 0.71 percent, to 2,382.24 and the Nasdaq Composite added 35.65 points, or 0.61 percent, to 5,892.47.
MSCI's all-country world stock index gained 0.7 percent.
The dollar fell 0.7 percent against a basket of key currencies and hit a one-week low against the yen, while the euro hit a session high against the greenback.
Prices on benchmark 10-year Treasuries rose 17/32 to yield 2.533 percent, from 2.595 percent late on Tuesday.
U.S. crude rose 1.9 percent to $48.64 a barrel, after touching a three-month low a day earlier, while benchmark Brent gained 1.5 percent to $51.67 a barrel.
Before the decision, crude had been lifted by a surprise drawdown in U.S. crude inventories and data from the International Energy Agency suggesting OPEC cuts should create a crude deficit in the first half of 2017.
Earlier, the pan-European STOXX 600 index gained 0.4 percent, helped by energy and basic resource stocks .
Europe markets also focused on Dutch elections, where anti-EU firebrand candidate Geert Wilders is providing the latest test of anti-establishment and anti-EU sentiment.
Additional reporting by Ann Saphir, Editing by Nick Zieminski