GLOBAL MARKETS-Global equities, U.S. yields rise on Ukraine peace hopes, Fed rate hike

* Traders expect quarter-percentage-point rate hike

* U.S. 10-year yields near three-year highs

* Brent crude future down

* Safe-haven gold, U.S. dollar fall (New throughout, updates prices, market activity and comments with U.S. markets)

NEW YORK, March 16 (Reuters) - Global equity markets and U.S. Treasury yields rose on Wednesday as investors expected the Federal Reserve to raise U.S. interest rates, and grew more hopeful for a breakthrough in ceasefire talks between Russian and Ukraine. The Fed will likely end to its ultra-easy pandemic-era monetary policy with a rate rise of at least 25 basis points to fight surging inflation. Traders will also parse the tone of the Fed’s policy statement and watch details of projected economic conditions. Benchmark 10-year U.S. Treasury yields hit the highest in almost three years, hours before the Fed decision was expected. The yields were last at 2.1777%. During the session they reached 2.204%, the highest since May 2019. “The quarter-point hike is already in the market, already known. What will have an effect on the market is what the Fed ends up saying after the announcement, whether they seem hawkish or dovish,” said Michael Ashley Schulman, chief investment officer at Running Point Capital in California. MSCI’s world equity index, which tracks shares in 50 countries, gained 2.41%. European stocks rose, rebounding from a loss the previous session, with sentiment buoyed by positive comments from Ukrainian and Russian officials on prospects of an agreement to end the three-weeks old conflict. The pan-European STOXX 600 index rose 3.07%, while MSCI’s broadest index of Asia-Pacific shares outside Japan had closed 5.1% higher overnight. On Wall Street, the three main indexes were trading up ahead of the Fed’s anticipated rate hike announcement, driven by stocks in the technology, financials and consumer discretionary sectors.

The Dow Jones Industrial Average rose 1.2% to 33,946.4, the S&P 500 gained 1.64% to 4,332.16 and the Nasdaq Composite added 2.57% to 13,281.65.

“At this point, I think you have a lot of active investors and hedge funds that are seeking any news that would make for a tradable bottom despite the dire global macro scenario of inflation, rising rates, and a horrible war in Russia-Ukraine,” Schulman added.

Oil bounced all over the place in another volatile session as traders reacted to the peace talks and a surprising increase in U.S. inventories. Benchmark Brent crude had swung between $97.55 and $103.70 and was at $99.54 per barrel, down 0.37% in early afternoon trading. U.S. West Texas Intermediate (WTI) crude rose 0.15% to $96.58. The U.S. dollar slid further from almost two-year highs reached over the past week, while Ukraine peace hopes pushed the euro higher. The dollar index fell 0.317%, with the euro up 0.47% to $1.1002. Safe-haven gold fell to more than a two-week low. Spot gold dropped 0.5% to $1,908.83 an ounce, while U.S. gold futures fell 0.76% to $1,913.80 an ounce.

Reporting by Chibuike Oguh in New York; Editing by David Gregorio