FEDWATCH Microsoft MSFT.O shares rose 1.2%, providing the biggest boost to the S&P 500 and Nasdaq, while energy shares also were higher along with oil prices. By Caroline Valetkevitch NEW YORK, Jan 12 (Reuters) - U.S. stocks closed higher on Thursday, extending recent gains as data showing a fall in consumer prices in December bolstered expectations of less aggressive interest rate hikes from the Federal Reserve. "The (CPI) report confirms that inflation is in a downward trend and that it has reversed," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.