* U.S. stocks edge higher ahead of Fed rate decision
* Fed expected to reiterate low rates for extended period
* Euro boosted by S&P's affirmation of Greek debt rating
* Commodities benefit from U.S. dollar weakness.
* U.S. semiconductor stocks gain on demand outlook
(Updates markets, adds S&P affirming Greece, comment)
By Daniel Bases
NEW YORK, March 16 (Reuters) - Global stocks notched solid
gains on Tuesday after Standard & Poor's affirmed its credit
rating on Greece, which helped extend the euro's rise versus
the U.S. dollar ahead of a U.S. monetary policy decision.
S&P's decision to end its review for a ratings downgrade
removed a potential blow to Greece's efforts to raise capital
in international markets to plug a gaping fiscal shortfall. A
modest improvement in German economic sentiment also helped the
euro's fortunes.
The weaker dollar helped spur a more than 2 percent rise in
the price of crude oil, as investors awaited the outcome of the
U.S. Federal Reserve's one-day policy meeting and an OPEC
meeting on Wednesday.
The interest rate decision by the U.S. Federal Reserve was
due at around 2:15 p.m. (1815 GMT).
The Fed is expected to leave interest rates unchanged in a
range between zero and 0.25 percent and maintain a view that
rates will remain low for an extended period of time in order
to help spur economic recovery.
In midday New York trade, the Dow Jones industrial average
<> rose 25.47 points, or 0.24 percent, at 10,667.62. The
Standard & Poor's 500 Index <.SPX> climbed 5.68 points, or 0.49
percent, at 1,156.19. The Nasdaq Composite Index <> gained
up 11.05 points, or 0.47 percent, at 2,373.26.
"If the Fed does what is expected and gives us more of the
same, the market will be in a sweet spot with low inflation
expectations and improving economic indicators," said Channing
Smith, vice president at Capital Advisors in Tulsa, Oklahoma.
Intel <INTC.O> was the top boost for the Dow, gaining 3.2
percent to $21.85 after it released its newest server chips,
preparing for an expected rise in demand. The Philadelphia
semiconductor index <.SOXX> gained 2.1 percent.
[]
In Europe, banking shares led markets higher with the
pan-European FTSEurofirst 300 <> gaining 1.04 percent to
1,062.01 points, recovering lost ground following S&P's
decision on Greece.
"Sovereign debt problems are not a issue for equities
anymore. The market realized that the problem will be
addressed, so Greece is not an issue at this juncture," said
Franz Wenzel, strategist at AXA Investment Managers, in Paris.
Energy shares rose with the higher crude oil prices, with
Royal Dutch Shell <RDSa.L> rising 1.3 percent and Total
<TOTF.PA> up 0.6 percent.
MSCI's all-country world index <.MIWD00000PUS> rose 0.87
percent.
Japan's Nikkei closed 0.3 percent <> lower as the
market took a breather day after hitting a seven-week high.
CURRENCIES
S&P ended its review for a downgrade for Greece, saying the
government's recent deficit reduction measures are supportive
of the ratings. Concerns about Greek debt have been a drag on
equities in recent weeks.[]
The dollar fell against the euro in the wake of S&P's move
as well as the decision by ministers of the 16-nation euro
zone, which includes Greece, late on Monday to agree on
"technical modalities" that would permit aid for Greece to be
rapidly rolled out, but gave no figures and few details.
European Union finance ministers on Tuesday backed the
plans to help Greece financially. []
"You have a slight improvement in risk because of the
reported deal from the EU ministers to aid Greece, although the
details are unclear," said Michael Malpede, market analyst at
Easy Forex in Chicago.
The euro was also supported against the dollar and yen
after the German ZEW institute's economic sentiment index came
in higher than expected. []
The greenback fell against a basket of major currencies,
with the U.S. dollar index <.DXY> down nearly 0.57 percent at
79.795.
The euro <EUR=> rose 0.61 percent at $1.3756 from a
previous session close of $1.3673. Against the Japanese yen,
the dollar <JPY=> fell 0.11 percent at 90.42 yen from a
previous session close of 90.520.
The 10-year Greek government bond yield <GR4032666=TWEB>
dropped as low as 6.183 percent from around 6.29 percent just
before the S&P announcement, according to TradeWeb data, taking
the spread over benchmark German Bund to 305 basis points from
315 basis points.
Benchmark 10-year U.S. Treasury notes <US10YT=RR> were up
5/32 of a point in price, pushing the yield down to 3.68
percent from 3.70 percent late on Monday.
Longer-dated Treasuries rose as investors sought
higher-yielding securities on expectations that the Fed, in its
policy decision, will stick to its near-zero interest rate
policy even as the jobs market seems to be stabilizing.
In commodity markets, U.S. light sweet crude oil <CLc1>
rose $1.93, or 2.42 percent, to $81.73 per barrel.
OPEC is expected to keep output unchanged at its Wednesday
meeting in Vienna, with Saudi Arabia's oil minister saying the
producers' group may not need to adjust output policy this year
if the oil market remains stable.
Spot gold prices <XAU=> rose $16.10, or 1.45 percent, to
$1,124.70.
(Additional reporting by Wanfeng Zhou and Ryan Vlastelica in
New York and George Matlock, Ian Chua, Tamawa Desai, Jessica
Mortimer and Brian Gorman in London; Editing by Leslie Adler)
