* Dollar hits 3-year low, no change of tack seen from Fed
* World stocks flat after Asian gains, Europe fades
* Silver rebounds after sharp losses
(Updates with European market moves, fresh quotes, detail)
By Mike Peacock
LONDON, April 27 (Reuters) - The U.S. dollar plumbed a
three-year low against other major currencies on Wednesday
before a Federal Reserve decision which is expected to reaffirm
ultra-easy policy, while European shares inched lower.
The dollar <.DXY> skidded to 73.493 against a currency
basket, driven by interest rate differentials.
The index is now down close to 10 percent from its peak in
January and many traders expect it eventually to revisit an
all-time low of 70.698 hit in 2008. []
The U.S. central bank is expected to use a post-meeting
statement to confirm it will complete its $600 billion
bond-buying programme and renew its commitment to rock-bottom
borrowing costs for "an extended period". []
Interest is particularly intense because Fed Chairman Ben
Bernanke will hold the first-ever regularly scheduled news
conference by a Fed chief at around 1815 GMT.
While he is expected to paint a cautious picture of the
world's largest economy, the European Central Bank raised rates
for the first time in two years this month and is poised for a
repeat before too long.
Asian and Latin American central banks have been tightening
monetary policy for some time and some are using currency
appreciation to check price pressures.
"It's clear Fed monetary policy is the reason for dollar
weakness. If we don't get any hint that the Fed will normalise,
the dollar will continue to stay under selling pressure," said
Lutz Karpowitz, currency strategist at Commerzbank in Frankfurt.
The euro flew to a high of $1.4715 <EUR=> after breaking
above $1.47 for the first time since December 2009. It was last
at $1.4662, having traded below $1.29 at the start of the year.
The split in monetary policy has helped revive the "carry
trade", in which investors borrow in a low-yielding currency to
invest in higher-yielding assets or currencies.
Investors have been snapping up the high-yielding Australian
dollar <AUD=D4> -- against which the greenback hit a 29-year low
on Wednesday following a big jump in Australian inflation --
while China let the yuan <CNY=SAEC> rise to a post-2005
revaluation high, triggering gains in emerging Asian currencies.
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Fed funds rate expectations: http://r.reuters.com/xyz48r
Fed QE timelines: http://r.reuters.com/faq98r
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WORLD STOCKS EDGE UP
The FTSEurofirst 300 index of top European shares was down
0.25 percent at 1,142.86 points by 0800 GMT, retreating from a
two-week high hit in the previous session.
But a stronger showing in Asia, where shares rose after
robust U.S. gains overnight on the back of strong company
earnings, left world stocks as measured by the MSCI All-Country
World Index <.MIWD00000PUS> flat at 352.21.
Japan's Nikkei <> closed up 1.4 percent, supported by
rebounding shares of large exporters. But it could face downward
pressure after ratings agency Standard & Poor's revised its
outlook on Japan's sovereign debt to negative, a move which
caused the yen to slip.
South Korea's KOSPI index <.KSII> hit a record high for the
third consecutive session before giving back gains as investors
took profits on automaker shares. It ended flat.
SILVER LINING
Silver, the superstar commodity of the year, rebounded from
a three percent fall on Tuesday, its biggest one-day loss in six
weeks, which followed Monday's rally to near record levels.
Spot silver <XAG=> bounced 0.9 percent to $45.88 at one
point and has climbed about 49 percent so far this year, far
outpacing gold's 6 percent gain.
Spot gold <XAU=> which hit a lifetime high of $1,518.10 on
Monday, was little changed at $1,505.50 by 0800 GMT. []
Brent crude for June <LCOc1> fell 15 cents to $123.99 a
barrel.
"Oil will continue to trade in this range till the outcome
of the Fed meeting is known at least," said Serene Lim, an
analyst at ANZ.
* For Reuters Global Investing Blog, click on
http://blogs.reuters.com/globalinvesting
* For the MacroScope Blog, click on
http://blogs.reuters.com/macroscope
* For Hedge Fund Blog, click on
http://blogs.reuters.com/hedgehub
(Additional reporting by Naomi Tajitsu in London, Blaise
Robinson in Paris and Ian Chua in Sydney; Editing by Catherine
Evans)
