* U.S. stocks flat, Fed seen leaving rates steady
* Fed expected to reiterate low rates for extended period
* Euro gains on improved German economic sentiment
* EU standby plan on Greece gives euro breathing space
(Updates with U.S. markets, changes byline, dateline, previous
LONDON)
By Daniel Bases
NEW YORK, March 16 (Reuters) - U.S. stock prices were flat
early on Tuesday as investor caution ahead of a U.S. interest
rate decision left little appetite for risk while the euro was
aided by a modest improvement in German economic sentiment.
Share prices generally rose globally while the weaker U.S.
dollar gave a boost to commodities, helping both crude oil and
gold prices rise more than 1.25 percent.
The U.S. Federal Reserve started a regular interest
rate-setting meeting while the latest U.S. economic data showed
winter storms disrupted house building last month and prices
paid for imported products provided more evidence of a
tentative economic recovery. For more see [].
A combination of the weak economic data, which gave U.S.
Treasuries a slight fillip as inflation is not an immediate
concern, and likely unchanged interest rates, currently in a
range of zero to 0.25 percent, means borrowing costs will stay
low. The Fed decision is expected around 2:15 p.m. (1815 GMT).
"The anticipation for the Fed is that they're going to give
a slightly more upbeat outlook for the U.S. economy but at the
same time they're going to keep the language intact and not
signal any rate increase any time soon," said Brian Dolan,
chief currency strategist at Forex.com in Bedminster, New
Jersey.
The greenback fell against a basket of major
trading-partner currencies with the U.S. dollar index <.DXY>
down nearly 0.5 percent at 79.884.
In early New York trade, the Dow Jones industrial average
<> slipped 4.23 points, or 0.04 percent, at 10,637.92. The
Standard & Poor's 500 Index <.SPX> rose 1.16 points, or 0.10
percent, at 1,151.67. The Nasdaq Composite Index <> gained
0.71 points, or 0.03 percent, at 2,362.92.
MSCI's all-country world index <.MIWD00000PUS> rose 0.58
percent, with the pan-European FTSEurofirst 300 <>
gaining 0.62 percent, off its session highs as Wall Street
opened with only a tepid advance.
European bank shares rose, helped push indexes higher.
However, Japan's Nikkei closed 0.3 percent <> lower as
the market took a breather after having risen to a seven-week
high in the previous session.
EUROPE
EU finance ministers on Tuesday discussed standby plans
drawn up by countries using the euro to provide Greece with
financial help if it becomes the first state in 11 years of
euro zone monetary union to seek such aid. []
"The developments on Greece will be taken as a positive,
although the proof of the pudding will be in the eating," said
Andy Lynch, fund manager at Schroders.
The euro crept up against the dollar and yen following both
the finance ministers' meeting and after data showed the German
ZEW institute's economic sentiment index came in higher than
expected. []
The euro <EUR=> rose 0.39 percent at $1.3727 from a
previous session close of $1.3673. Against the Japanese yen,
the dollar <JPY=> fell 0.21 percent at 90.33 yen from a
previous session close of 90.520.
Crude oil prices rose 1.79 percent or $1.41 a barrel to
$81.21 <CLc1>. Spot gold prices climbed 1.40 percent or $15.50
an ounce to $1,123.60 <XAU=>.
Benchmark 10-year U.S. Treasury notes <US10YT=RR> were up
4/32 of a point in price, pushing the yield down to 3.68
percent from 3.70 percent late on Monday.
Euro zone benchmark government bond futures turned positive
at Wall Street's open. Greek debt yields widened their premium
over German Bunds after some profit-taking on weaker
sovereigns' paper.
The June Bund future <FGBLc1> scaled a session high of
122.78 after languishing in negative territory for the first
half of the European session.
The premium investors demand to buy 10-year Greek bonds
rather than euro zone benchmark Bunds reversed earlier
tightening. It was last seen at 310 basis points having earlier
marked 297, according to Tradeweb data. The spread was back at
levels seen at the European settlement close on Monday.
(Additional reporting by Wanfeng Zhou in New York and George
Matlock, Ian Chua, Tamawa Desai, Jessica Mortimer and Brian
Gorman in London; Editing by James Dalgleish)
