GLOBAL MARKETS-World stocks hit 3-yr high, euro up on FOMC

                                
  
                                
 * Stocks rise on strong results, S&P 500 at new 2011 high
                                
 * Bonds gain before 2-year note auction, FOMC meeting
                                
 * Gold, silver retreat from record highs, oil treads water
                                
 * No respite seen for US dollar as Euro hits 16-month high
 (Adds fresh prices)
                                
 By Herbert Lash
                                
 NEW YORK, April 26 (Reuters) - World stocks surged to a
three year high on Tuesday and the U.S. dollar eased against
the euro as investors bet the U.S. Federal Reserve will keep
its easy monetary policy in place at its meeting this week.
                                
 U.S. government debt prices rose before the auction of $35
billion in two-year notes later in the session and ahead of a
highly anticipated news conference by Fed Chairman Ben Bernanke
on Wednesday. For details see: [ID:nN26335563]
                                
 Investors are focused on the U.S. central bank's first
scheduled briefing with reporters in its 97-year history, which
will cap the end of a two-day meeting of the policy-setting
Federal Open Market Committee.
                                
 U.S. Treasuries gained support on expectations the Federal
Reserve will leave interest rates near zero, fostering  a
friendly climate to own bonds at least in the near term.
                                
 "Investors are unlikely to learn from Bernanke when the Fed
will tighten as it is doubtful that he himself knows," said
Marc Chandler, global head of currency strategy at Brown
Brothers Harriman in New York.
                                
MSCI's all-country world index <.MIWD00000PUS> rose about
0.6 percent, standing at a new 2011 peak and close to a
three-year high.
                                
 The InterContinental Exchange's U.S. dollar index <.DXY>, a
basket of major currencies, was down 0.19 percent at 73.845,
while the euro <EUR=> was up 0.34 percent at $1.4628.
                                
 Wall Street rallied after solid earnings from Ford Motor Co
<F.N>, 3M Co <MMM.N> and United Parcel Service <UPS.N>, and on
a survey of consumer confidence that topped analysts' forecasts
and showed inflation expectations eased somewhat in April.
[ID:nN26258555]
                                
 Both the benchmark Standard & Poor's 500 index and the
iconic Dow Jones industrial average set new intra-day highs for
2011, climbing to near three-year peaks. The S&P 500 is up
about 7 percent for the year.
                                
 U.S. corporate earnings have been generally strong so far
this season, with around three-quarters of S&P 500 index
companies beating analysts' forecasts, helping lift the Dow
industrials up to near three-year highs.
                                
 Investors were cheered by a report that showed consumers
felt better about the short-term outlook. The Conference Board,
an industry group, said its index of consumer attitudes rose to
65.4 in April from a revised 63.8 in March. [ID:nN26218031]
                                
 The Dow Jones industrial average <.DJI> was up 80.34
points, or 0.64 percent, at 12,560.22. The Standard & Poor's
500 Index <.SPX> was up 9.81 points, or 0.73 percent, at
1,345.06. The Nasdaq Composite Index <.IXIC> was up 20.60
points, or 0.73 percent, at 2,846.48.
                                
 The Fed is expected to say it will complete a $600 billion
bond-buying program known as quantitative easing that is
scheduled to end in June. [ID:nN1941922]
                                
 If the Fed were to surprise the market and turn more
hawkish, it would pose a risk to the sizable amount of dollar
shorts in the currency market, analysts said.
                                
 The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
4/32 in price to yield 3.35 percent.
                                
 Crude oil rebounded slightly, while silver and gold tumbled
after pushing to new highs in the case of gold early Monday.
[ID:nLDE73P0XB]
                                
 North Sea Brent crude futures <LCOc1> were up 32 cents at
$123.98 a barrel.
                                
 U.S. crude futures <CLc1> slid 19 cents at $112.09 a
barrel.
                                
 Silver was set for its largest one-day fall in six weeks
after having hit fresh 31-year highs, while gold came under
pressure from investor uncertainty over the likely course of
U.S. monetary policy. [ID:nLDE73P0XB]
                                
 Spot silver <XAG=> ceded nearly 5.0 percent to $44.61 an
ounce at one point, after surging on Monday to within 17 cents
of the record $49.48 hit in January 1980.
                                
 Gold <XAU=> hit a record high of $1,518.10 a troy ounce on
Monday but slipped to just below $1,500.
                                
 "The rally has been strong. It's not surprising to see
profit-taking ahead of the FOMC meeting," said Peter Fertig, a
consultant at Quantitative Commodity Research.
                                
 "Markets expect it will be a dovish statement from the U.S.
Fed, but there are worries about them ending (quantitative
easing) ahead of time," Fertig said.
                                
 European stocks also rose, gaining ground for the fourth
consecutive session, after UBS's <UBSN.VX> results sparked a
rally in the financial sector. [ID:nLDE73P14W]
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
was up 0.2 percent at 1,144.71 points.
 (Reporting by Julie Haviv, Edward Krudy, Ellen Freilich; 
Amanda Cooper and Ikuko Kurahone in London; Blaise Robinson in
Paris; Writing by Herbert Lash; Editing by Andrew Hay)