UPDATE 1-Brent crude stays above $125 on Fed comments, Iran

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* Investors' appetite for riskier assets boosted

* Sudan president suspends meeting after clashes with South Sudan (Adds Seaway Pipeline expansion, updates prices)

By Florence Tan

SINGAPORE, March 27 (Reuters) - Brent held steady above $125 on Tuesday as comments from the U.S. Federal Reserve indicating easy monetary policy would remain in place for some time raised investors' appetite for riskier assets.

Oil prices also continued to draw support from supply concerns amid tightening Western sanctions on Iran over the Islamic Republic's disputed nuclear programme.

Brent crude fell 10 cents to $125.55 by 0602 GMT after gaining 52 cents to settle at $125.65 a barrel on Monday.

U.S. crude was also down 10 cents to $106.93.

"It was more a reminder that the Fed stands ready to turn on the printing presses again should conditions warrant it," said Ben Le Brun, market analyst with OptionsXpress in Sydney.

"All risk assets including oil rallied strongly last night after his comments and this has to a large degree offset the potential impact from a slowdown in China."

Fed Chairman Ben Bernanke said the U.S. economy needs to grow more quickly if it is to produce enough jobs to bring down the unemployment rate and this process can be supported by continued accommodative policies. The U.S.

">* Investors' appetite for riskier assets boosted* Sudan president suspends meeting after clashes with South Sudan (Adds Seaway Pipeline expansion, updates prices)By Florence TanSINGAPORE, March 27 (Reuters) - Brent held steady above $125 on Tuesday as comments from the U.S"central bank has said it would likely keep interest rates near zero at least through late 2014.

Investors were expecting a quick reversal of monetary easing following upbeat economic signs.

Asian stocks rebounded, after a more than 1 percent gain in Wall Street stocks, while the dollar eased following Bernanke's comments.

A weaker greenback makes dollar-denominated commodities cheaper for holders of other currencies.

SUPPLY WORRIES

The front-month Brent crude futures have risen about 17 percent so far this year on worries over supply from Iran, while geopolitical tensions in the Middle East and Africa have also disrupted crude supplies from Syria, South Sudan and Yemen.

Tighter Western sanctions have prompted top Iranian crude buyers, including China and India, to seek supplies from other countries.

China Petroleum and Chemical Corp (Sinopec) is looking to diversify its crude oil imports, the company's chairman said on Monday, following a sharp drop in its first-quarter purchases from Iran.

Investors have not ruled out the possibility of a military strike by Israel on Iran that could cause oil prices to spike, Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.

Yet the recent developments such as talks between the United States and the U.K. on a release of oil reserves and the urgency to speed up the construction of the south Keystone pipeline could mean that the world will be well supplied with oil if a strike takes place, Barratt added.

Hopes for a quick resumption in South Sudan crude output were dashed after Sudan's President Omar Hassan al-Bashir suspended a planned meeting in South Sudan's capital Juba following clashes between armed forces from both sides on Monday, state media reported.

The meeting was aimed at resolving the countries' bitter disputes over oil and border regions and restoring crude production in South Sudan halted since January.

Investors will scour U.S. weekly inventories data due later on Tuesday from industry group American Petroleum Institute (API) to assess demand at the world's largest oil user.

U.S. commercial crude oil stockpiles were forecast to have risen last week on an increase in imports, a preliminary Reuters poll of analysts showed.

In a move that could ease a major oil bottleneck in the United States, Enbridge Inc and Enterprise Products Partners LP said on Monday they would twin their jointly owned Seaway Pipeline, adding a capacity of 450,000 bpd to it. (Additional reporting by Francis Kan; Editing by Himani Sarkar)

Energy.