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* Expectations of Fed stimulus lift stocks
* Fed set to announce fresh round of bond buying
* U.S. dollar slides to multi-month lows vs higher-yielders
By Wanfeng Zhou
NEW YORK, Dec 12 (Reuters) - U.S. stocks rose and commodities climbed on Wednesday on expectations the U.S. Federal Reserve will announce a fresh round of bond buying to stimulate a fragile economic recovery.
The U.S. dollar fell against the euro and hit multi-month lows against higher-yielding currencies such as the Australian and New Zealand dollars as the prospect of more Fed monetary stimulus eroded the appeal of dollar-denominated assets.
The Fed looks certain both to extend its purchases of mortgage-backed debt and replace another expiring stimulus program with a new bout of money creation. Worries about the economy have mounted because of political wrangling in Washington over the government budget.
The central bank will announce its decision around 12:30 p.m. (1730 GMT) at the end of a two-day meeting, and Fed Chairman Ben Bernanke will discuss it at a news conference at 2:15 p.m. (1915 GMT).
"I think the market has already discounted that the Fed is going to announce more stimulus, so what's more important is what Chairman Bernanke says, which may give us clues on economic activity going forward," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
"We might see a bit of selloff after Bernanke's comments, but we've been up for five straight days, so that shouldn't be surprising."
The Dow Jones industrial average gained 34.09 points, or 0.26 percent, to 13,282.53. The Standard & Poor's 500 Index rose 3.88 points, or 0.27 percent, to 1,431.72. The Nasdaq Composite Index added 8.27 points, or 0.27 percent, to 3,030.57.
The FTSEurofirst 300 index edged down 0.04 percent to 1138.31 points. The MSCI global stock index added 0.4 percent to 338.19 points, helped by a rise in MSCI's broadest index of Asia-Pacific shares outside Japan , which hit 16-month highs.
The prospect of more Fed stimulus also buoyed commodity prices. Brent crude futures were up $1.96 to $109.97 a barrel. U.S. crude was up $1.17 to $86.96 a barrel.
Gold rose 0.3 percent to around $1,715 an ounce.
After the Fed meeting, investors attention should quickly refocus on talks in Washington to avert the "fiscal cliff" of automatic spending cuts and tax increases that many fear would tip the U.S. economy back into recession next year.
Negotiations intensified as President Barack Obama and U.S. House of Representatives Speaker John Boehner spoke by phone on Tuesday after exchanging new proposals.
The euro rose 0.2 percent to $1.3037. The Australian dollar rose to a three-month high against the U.S. dollar. The New Zealand dollar touched its highest since Feb. 29, while the U.S. dollar slipped to an eight-week low against its Canadian counterpart.
Many economists forecast the Fed will opt for monthly purchases of $45 billion in Treasury securities. The risk, analysts said, is that policymakers may decide to buy more than that, which would put the dollar under further broad selling pressure.
"All eyes are on the Fed and that has clearly been the driver for this week, at least with the dollar down across the board," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington D.C. "We're seeing high yielders like the aussie and kiwi benefit on expectations of further central bank easing."
But the dollar reached an eight-month high against the yen on bets the Bank of Japan will implement more aggressive monetary easing after an election on Sunday expected to yield a victory for the Liberal Democratic Party.
Treasury prices fell slightly as investors sold to make room for new debt issuance and analysts said the expected Fed action has largely been priced into the market. The benchmark 10-year U.S. Treasury note was down 3/32, with the yield at 1.6644 percent.