By Chuck Mikolajczak
NEW YORK (Reuters) - Global equity markets advanced and the dollar held steady on Wednesday as investors prepared for what is widely anticipated 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) and will be 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.
"There is always that slight chance they won't raise, but it is very, very slight at this point," said Keith Bliss, senior vice-president at Cuttone & Co in New York.
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"I give the odds of them not doing anything even lower than what the fed funds futures are showing."
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 32.3 points, or 0.18 percent, to 17,557.21, the S&P 500 gained 5.72 points, or 0.28 percent, to 2,049.13 and the Nasdaq Composite added 11.97 points, or 0.24 percent, to 5,007.33.
MSCI's all-country world index rose 0.7 percent, while the pan-European FTSEurofirst 300 index rallied 2.8 percent.
Brent crude slid 3.1 percent at $37.25 after snapping a six-day losing streak on Tuesday on fresh evidence of growing global oversupply. U.S. crude dropped 4.1 percent at $35.83.
In the currency market, there was mainly fine tuning ahead of the Fed decision.
The dollar index , down 0.05 percent at 98.167 held near a near one-week high versus a basket of other major currencies on hesitation ahead the Fed decision. The euro advanced 0.2 percent at $1.0943.
Benchmark 10-year Treasury notes lost 10/32 in price to yield 2.3013 percent.
Gold rose 1.3 percent to 1,074.71 an ounce, buoyed by expectation of a slow pace of tightening by the Fed.
(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)