* Expectations of Fed stimulus boost riskier assets
* World shares up 0.25, Wall St seen higher
* Dollar under pressure against higher yield currencies
* U.S. central bank decision due at 1730 GMT
* Oil firmer as OPEC meets, no change in output seen
By Richard Hubbard
LONDON, Dec 12 World equities and commodities
edged higher on Wednesday, supported by widespread expectations
of further monetary stimulus from the U.S. Federal Reserve when
it ends a two-day policy meeting later in the day.
U.S. stock index futures suggested Wall Street was also
likely to see a sixth day of gains as investors anticipated the
Fed's decision, due at 1730 GMT.
In contrast, safe-haven assets like the dollar, U.S.
Treasury bonds and German bunds eased, with the greenback
hitting multi-month lows against some higher yielding
Markets expect the Fed to expand its current asset purchase
scheme, committing to buy $45 billion of U.S. debt a month and
extend purchases of mortgage-backed debt, to help sustain the
fragile U.S. economic recovery.
"We think that more quantitative easing is coming and this
next round will be the most aggressive yet," said Ralf Preusser,
head of European rates research at BofA Merrill Lynch Global
Given a general improvement in economic data from the United
States and China and signs of stabilisation in Europe, the Fed's
decision should underpin demand for riskier assets, although
there is a chance chairman Ben Bernanke may use the subsequent
news conference, at 1915 GMT, to signal a change in its outlook.
"I wouldn't expect too much volatility going into the
meeting but afterwards though it will depend on whether they
give any guidance on thresholds for unemployment and inflation
in the future," said Michael Leister, senior interest rates
strategist for Commerzbank.
In any event the meeting's outcome is likely to be quickly
overshadowed by developments at talks in Washington designed to
avert the "fiscal cliff" - spending cuts and tax increases that
will be triggered automatically if no federal budget is agreed.
The squeeze, equivalent to some $600 billion, would take
effect in January and is of great concern to the markets because
it could tip the giant U.S. economy back into recession and
stall the fragile global recovery.
President Barack Obama and U.S. House of Representatives
Speaker John Boehner spoke by phone on Tuesday after exchanging
new proposals on the budget, a discussion some investors saw as
a sign of progress that added to the firmer tone in the markets.
MSCI's world equity index was up 0.25
percent at 337.82 points, helped by a gain of 0.5 percent in
MSCI's broadest index of Asia-Pacific shares outside Japan
, which is at 16-month highs.
In Europe, the FTSEurofirst 300 index of top
companies extended a steep three-week rally to be up about 0.2
percent at 1.140.80 points, a level not seen for 18 months.
London's FTSE 100, Frankfurt's DAX and the
French CAC-40 were flat to 0.4 percent higher.
The strength in equities market encouraged selling of
safe-haven assets, pushing the main German Bund futures contract
down 14 basis points to 145.27.
AGGRESSIVE MOVE RISK
The euro gained 0.2 percent against a weaker dollar
ahead of the Fed's decision, reaching $1.3026, well above a low
of $1.2876 reached last week.
The greenback suffered more heavily against other
high-yielding currencies as some investors saw a risk the Fed
may ease more aggressively than expected.
"People are selling the dollar on the possibility that the
Fed could do more easing than the market is expecting," said
Niels Christensen, currency strategist at Nordea in Copenhagen,
referring to the extent of monthly Fed bond purchases.
"If it is a neutral decision, they could buy it back on the
fact. But if they do more, say above $50 billion (a month), then
the dollar would be on the defensive."
The higher-yielding Australian dollar rose to a three-month
peak of $1.0552, while the greenback fell to an
eight-week low against the Canadian dollar of C$0.9853 CAD=D4
. The New Zealand dollar hit a nine-month high of $0.8418
In the commodities sector, prices were well supported by the
hopes of more monetary easing. London copper was up 0.4
percent at $8,132.75 a tonne and near a two-month high, while
spot gold inched up 0.25 percent to $1,713.94 an ounce.
Brent crude traded at near $109 a barrel on the Fed easing
expectations, although analyst said the gains were being limited
by expectations that OPEC oil ministers meeting in Vienna on
Wednesday will keep the group's current output steady, despite
forecasts for a fall in demand in the first half of 2013.
Brent futures were up 0.9 percent at $108.98 a barrel
while U.S. crude was 0.7 percent higher at $86.42 a