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* Weaker-than-expected U.S. data knocks dollar
* Treasury prices fall ahead of Fed
* Stocks flat near month-long highs
* Weaker dollar helps lift oil (Updates data, adds quotes)
By Dion Rabouin
NEW YORK, April 26 (Reuters) - The dollar fell on Tuesdayafter weaker-than-expected U.S. economic data boostedexpectations the Federal Reserve would hold interest rates lowerfor longer, while U.S. Treasury yields touched five-week highsas traders made room for government debt supply ahead of thecentral bank's policy statement.
U.S. durable goods orders rebounded less than anticipated inMarch and a survey of American consumer confidence missedexpectations, adding to a slew of weak data on the U.S. economyin the first quarter.
Tuesday's economic data "plays into the idea that the Fedneed not be in any rush to raise rates," said RichardFranulovich, senior currency strategist at Westpac BankingCorporation in New York.
The lack of uncertainty about Wednesday's statement after atwo-day meeting of the policy-setting Federal Open MarketCommittee also led traders on Wall Street to hold stocks neartheir highest levels of the year.
"I don't think there will be any surprises there," saidGordon Charlop, a managing director at Rosenblatt Securities inNew York, of the Fed meeting.
"Could they throw a curveball at us? Of course that's alwaysa possibility, but that's not their style, and they've beenpretty accommodative ... so I don't think traders are overlyconcerned."
The Dow Jones industrial average rose 13.08 points,or 0.07 percent, to 17,990.32, the S&P 500 gained 3.91points, or 0.19 percent, to 2,091.7 and the Nasdaq Composite dropped 7.48 points, or 0.15 percent, to 4,888.31.
Fed funds futures show investors see no chance the U.S.central bank will raise benchmark interest rates above thecurrent rate of 0.25 to 0.5 percent on Wednesday. Tuesday'sunexpectedly weak data cut the likelihood of any rate hike in2016, analysts said.
"It is pretty much a given that the FOMC won't raise ratesat this meeting, and may not raise rates until the end of theyear," said Kevin Giddis, head of fixed income capital marketsat Raymond James in Memphis, Tennessee.
Markets see a 23 percent chance of interest rates rising inJune, according to CME Group's FedWatch.
As traders await the Fed's policy statement, due at 2 p.m.EDT (1800 GMT) on Wednesday, sovereign debt supply on both sidesof the Atlantic helped lift benchmark U.S. and German yields toor close to five-week highs.
U.S. benchmark 10-year Treasury notes slipped11/32 in price to yield 1.941 percent, the highest since March23.
The 30-year yield reached its highest sinceearly February at 2.764 percent.
The U.S. dollar index, which measures the dollaragainst a basket of six major currencies, fell 0.25 percent to94.616.
The weaker dollar and expectations that a persistent globaloil glut would ease lifted oil prices, as did a 3-percent hikein U.S. gasoline and heating oil prices.
Crude oil futures rose 3 percent with bothBrent and U.S. crude approaching five-month highs touched lastweek.
European bourses edged higher, boosted by aless-bad-than-expected 80 percent first-quarter profit fall andunchanged dividend from BP, as well as encouragingresults from pulp and paper maker UPM.
Emerging markets indexes rose along with Chinesestocks, while Japan's Nikkei was lower on theday. (Reporting by Dion Rabouin; Additional reporting by SamForgione and Richard Leong in New York and Jemima Kelly inLondon; Editing by Meredith Mazzilli and James Dalgleish)
