US STOCKS-S&P 500 widens losses, as Fed holds rates steady

* S&P extends losses, Dow goes negative after Fed decision

* Bank stocks pare gains

* Indexes down: Dow 0.15 pct, S&P 0.45 pct, Nasdaq 0.66 pct (Updates to mid-afternoon, adds commentary changes byline, adds New York dateline)

NEW YORK, Nov 8 (Reuters) - The S&P 500 extended its losses slightly and the Dow turned negative on Thursday afternoon, after the U.S. Federal Reserve said it was keeping interest rates steady in a statement following its two-day meeting.

The U.S. central bank said that ongoing strong job gains and household spending had kept the economy on track.

Aside from a comment that business investments had moderated from earlier in the year, investors said that the statement was largely as expected and suggested that the Fed's next rate hike would be in December.

"What the statement overall signals is that they're still on track to raise rates. December is in the plan and they don't see any reason to slow or stop the rate increases," said Brad McMillan, Chief Investment Officer for Commonwealth Financial Network, an independent broker-dealer in Waltham, Mass.

"This is very much in line with what the market expected. I see the market today walking back a little from the strong gains yesterday. There's no real news in the statement."

At 2:35PM ET, the Dow Jones Industrial Average fell 48.62 points, or 0.19 percent, to 26,131.68, the S&P 500 lost 13.12 points, or 0.47 percent, to 2,800.77 and the Nasdaq Composite dropped 51.31 points, or 0.68 percent, to 7,519.44.

The S&P bank index erased its gains and turned negative after the news as bank profits benefit from rising rates.

Declining issues outnumbered advancing ones on the NYSE by a 1.41-to-1 ratio; on Nasdaq, a 1.20-to-1 ratio favored decliners.

The S&P 500 posted 33 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 70 new highs and 69 new lows. (Additional reporting by Lewis Krauskopf in New York, Sruthi Shankar in Bengaluru; Editing by Arun Koyyur and Chizu Nomiyama)