(Updates prices to late afternoon with oil settlement)

* Wall Street choppy, dollar rises after Fed holds rates

steady

* Fed shows three dissents on easing bias, one dissenter

favored a cut now

* Microsoft ( MSFT ), Alphabet, Amazon ( AMZN ) and Meta earnings due

* Oil prices rally on fears of extended U.S. blockade of

Iran

By Sinéad Carew and Elizabeth Howcroft

NEW YORK/PARIS, April 29 (Reuters) - Oil prices soared

on worries about prolonged supply disruption due to the Middle

East war while Wall Street equities pared earlier losses in

choppy trading after a divided Federal Reserve kept rates steady

and investors looked cautiously ahead to financial releases from

U.S. megacap technology firms.

U.S. crude settled up 6.95%, or $6.95, at $106.88 a

barrel while Brent settled up 6.08%, or $6.77, at

$118.03 after earlier touching its highest point since June

2022, with little sign of a resolution two months into the

U.S.-Israeli war against Iran, which has snarled energy supplies

through the Strait of Hormuz.

A White House official said on Wednesday that U.S. President

Donald Trump had asked U.S. oil companies about ways to mitigate

the impact of a potentially months-long U.S. blockade of Iranian

ports. Meanwhile, in the first official estimate of the military

price tag for the Iran conflict, a senior Pentagon official said

on Wednesday that the war has cost $25 billion so far.

The S&P 500 was close to flat after the Fed noted rising

concerns about inflation while it drew three dissents from

officials who no longer feel the U.S. central bank should

communicate a bias towards lowering borrowing costs in its most

divided decision since 1992. A fourth dissent at the meeting

came in favor of a 25-basis-point rate cut.

Trump nominee Kevin Warsh is expected to replace Jerome

Powell as chair in coming weeks amid the White House's

unprecedented efforts to exert control over the world's most

powerful central bank.

Chris Grisanti, chief market strategist at Mai Capital

Management, said he saw the dissents as a "shot across the bow

to incoming Fed Chair Kevin Warsh, who has been a proponent of

easing."

"They dissented not to the rate decision, but to easing bias

in the statement. This serves two purposes: On its face, it's

more hawkish, and it says we may not be leaning towards easing

anymore, so that's new news," Grisanti said.

Powell said in a press conference that despite dissenting

votes against holding onto an interest rate easing bias, he does

not believe officials are leaning toward hiking interest rates.

U.S. equity indexes were already choppy before the meeting

as investors waited for earnings reports from market

heavyweights Microsoft ( MSFT ), Alphabet, Amazon ( AMZN )

, and Meta, due later in the day.

On Wall Streetat 3:07 p.m., the Dow Jones Industrial

Average fell 326.44 points, or 0.66%, to 48,816.71, the

S&P 500 fell 12.36 points, or 0.17%, to 7,126.36 and the

Nasdaq Composite fell 27.29 points, or 0.12%, to

24,635.17.

MSCI's gauge of stocks across the globe

fell 3.35 points, or 0.31%, to 1,065.63.

Earlier, the pan-European STOXX 600 index closed down

0.6% with mixed corporate results and data pointing to the

economic damage caused by the Iran war.

BOND YIELDS, DOLLAR RISE

U.S. Treasury yields were higher after the Fed's update.

The yield on benchmark U.S. 10-year notes rose

5.6 basis points to 4.408%, from 4.354% late on Tuesday while

the 30-year bond yield rose 3.7 basis points to

4.9813%.

The 2-year note yield, which typically moves in

step with interest rate expectations for the Federal Reserve,

rose 8.2 basis points to 3.926%.

In foreign exchange markets, the dollar rose against major

currencies after the Fed's update while markets were also on

edge over the U.S.-Israel war with Iran.

The dollar strengthened 0.47% to 160.36 Japanese yen,

putting it closer to levels that have previously triggered

intervention, despite the Bank of Japan signaling after its

policy meeting on Tuesday that it could raise rates in coming

months.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

rose 0.4% to 98.98, with the euro down 0.36% at $1.1669.

In precious metals, gold was on track for its third straight

day of declines after hitting its lowest level since March 31.

Spot gold fell 1.19% to $4,539.85 an ounce.