* Fed signals it could still tighten by year end
* BOJ adopts target for long-term interest rates
* 10 of 11 S&P sectors in positive territory
* Indexes up: Dow 0.35 pct, S&P 0.5 pct, Nasdaq 0.49 pct (Updates with further market reaction to Fed decision)
By Lewis Krauskopf
Sept 21 (Reuters) - Wall Street tallied gains on Wednesday after the U.S. Federal Reserve's decision to leave interest rates unchanged.
The central bank strongly signaled it could still tighten monetary policy by the end of this year as the labor market improved further. The Fed said U.S. economic activity had picked up and job gains were "solid" in recent months.
Traders generally had not expected the Fed to raise rates, with bets before the meeting of only an 18 percent chance of a hike, according to the CME FedWatch website.
"I don't think anybody is too surprised," said Alan Rechtschaffen, portfolio manager at UBS in New York. "There was some noise that the Fed might surprise the markets, but this Fed doesn't really do that."
The Dow Jones industrial average rose 63.96 points, or 0.35 percent, to 18,193.92, the S&P 500 gained 10.8 points, or 0.5 percent, to 2,150.56 and the Nasdaq Composite added 25.90 points, or 0.49 percent, to 5,267.26.
After the Fed decision, 10 of 11 major S&P sectors were in positive territory. Energy shares were the best performing sector, up 1.5 percent.
Earlier on Wednesday, global markets reacted to the Bank of Japan's abrupt shift to targeting interest rates on government bonds to achieve its elusive inflation target.
The Fed has held its target rate for overnight lending between banks in a range of 0.25 percent to 0.50 percent since December, when it raised borrowing costs for the first time in nearly a decade.
After the Fed's statement, traders were betting on a 64 percent chance of a December rate increase, up from 58 percent before the Fed statement, according to the FedWatch website.
"The body language makes it sound like they're warming people up for December," said Stephen Massocca, chief investment officer at Wedbush Equity Management in San Francisco.
In company news, Microsoft shares gained 0.9 percent after it said it would buy back up to $40 billion of its shares and raised its quarterly dividend.
FedEx shares gained 6.3 percent after the package delivery company's profit report.
Advancing issues outnumbered declining ones on the NYSE by a 3.21-to-1 ratio; on Nasdaq, a 1.68-to-1 ratio favored advancers.
The S&P 500 posted 8 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 72 new highs and 28 new lows. (Additional reporting by Chuck Mikolajczak and Sinead Carew in New York and Yashaswini Swamynathan in Bengaluru; Editing by Don Sebastian and Nick Zieminski)