By Chuck Mikolajczak
NEW YORK (Reuters) - Global equity markets advanced modestly and the dollar held steady on Wednesday as investors braced for what was widely expected to be the first rise in U.S. interest rates in nearly a decade.
The U.S. Federal Reserve will make its announcement at 2 p.m. (1900 GMT) followed by a news conference by Fed Chair Janet Yellen to elaborate on the central bank's latest policy statement.
The rate rise is largely priced in, as traders see more than an 80 percent chance the central bank will lift its targeted rate range to 0.25 percent to 0.50 percent from the current zero to 0.25 percent range, according to CME Group's FedWatch programme.
The move, while modest, will signal a broader comfort by the central bank in the health of the U.S. economy. Many market participants are expecting the Fed to indicate a gradual approach with the pace of future hikes.
"Far and away, the most important takeaway from the Fed meeting is their expectations of the velocity of the rate rise," said Philip Blancato, chief executive at Ladenberg Thalmann Asset Management in New York.
More From This Section
"I know that they don't have a crystal ball, but I want to get a better expectation for how quickly they expect to raise rates."
Markets have been volatile in recent weeks due to declines in oil prices, which have hurt balance sheets of highly indebted energy companies and raised alarms on high-yield debt markets.
The Dow Jones industrial average rose 4.74 points, or 0.03 percent, to 17,529.65, the S&P 500 gained 4.6 points, or 0.23 percent, to 2,048.01 and the Nasdaq Composite added 8.33 points, or 0.17 percent, to 5,003.69.
MSCI's all-country world index rose 0.7 percent, while the pan-European FTSEurofirst 300 index closed up 0.3 percent after a 2.9 percent rally in the prior session.
Brent crude resumed its slide and was down 3.2 percent at $37.24 after snapping a seven-day losing streak on Tuesday after U.S. government data showed a huge build in crude inventories. U.S. crude dropped 4.3 percent at $35.74.
In the currency market, there was mainly fine-tuning ahead of the Fed decision.
The dollar index , which measures the greenback against a basket of other major currencies, fell 0.03 percent at 98.185 but held near a near one-week high on hesitation ahead of the Fed decision. The euro edged up 0.05 percent at $1.0932.
Benchmark 10-year Treasury notes lost 10/32 in price to yield 2.3013 percent. The yield on two-year Treasuries touched 1 percent, the highest since May 2010.
Gold rose 1.6 percent to 1,077.40 an ounce, buoyed by expectation of a slow pace of tightening by the Fed.
(Additional reporting by Tanya Agrawal; Editing by Nick Zieminski and Meredith Mazzilli)