* 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 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
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
"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