March 15, 2017 / 3:35 PM / 4 months ago

GLOBAL MARKETS-Investors focus on expected Fed hike, oil rebounds

4 Min Read

* Dollar dips ahead of Fed decision

* Oil prices snap out of six-day slide

* European focus also on Dutch elections (Updates with morning U.S. trading, changes byline, dateline, previous London)

By Lewis Krauskopf

NEW YORK, March 15 (Reuters) - Financial markets braced for what was expected to be a U.S. interest rate hike later on Wednesday as a gauge of global stocks edged higher and the dollar dipped, while oil pulled out of a six-session slide.

The U.S. Federal Reserve was due to release it policy statement at 2 pm EDT (1800 GMT), with the central bank widely expected to raise interest rates for the second time in three months.

Market participants will be watching for whether the Fed will signal an even faster pace of monetary tightening this year than the three rate hikes it projected in December.

"The 25-basis point-hike is fully priced in, so that's not even going to be a factor ... it's more what the Fed's path is going to be going forward," said Societe Generale currency strategist Alvin Tan in London.

MSCI's all-country world stock index gained 0.2 percent.

On Wall Street, major equity indexes rose, with the energy sector rising 1.2 percent.

The Dow Jones Industrial Average rose 44.47 points, or 0.21 percent, to 20,881.84, the S&P 500 gained 7.32 points, or 0.31 percent, to 2,372.77 and the Nasdaq Composite added 8.39 points, or 0.14 percent, to 5,865.21.

Investors were also assessing data on U.S. retail sales, which registered their smallest increase in six months in February.

The pan-European STOXX 600 index gained 0.4 percent, helped by energy and basic resource stocks .

Shares of aircraft seats maker Zodiac Aerospace tumbled 16 percent after a profit warning.

The focus in Europe also was on Dutch elections, where anti-EU firebrand candidate Geert Wilders is providing the latest test of anti-establishment and anti-EU sentiment. It also comes ahead of votes later this year in France and Germany.

"The repercussions for France are the key aspect of this election, and if we see that the populists are keeping their momentum that will be reflected in French government bonds," DZ bank strategist Christian Lenk said.

Attention was also turning to Friday's G20 meeting in the German spa town of Baden-Baden, the first attended by U.S. President Donald Trump's economic team.

Oil prices were lifted by a surprise drawdown in U.S. crude inventories and data from the International Energy Agency suggesting OPEC cuts should create a crude deficit in the first half of 2017.

U.S. crude rose 1.9 percent to $48.64 a barrel, after touching a three-month low a day earlier, while benchmark Brent gained 1.8 percent to $51.82 a barrel.

The dollar fell 0.2 percent against a basket of key currencies ahead of the Fed decision. The euro edged up 0.2 percent.

The U.S. Treasury yield curve flattened, with two-year yields touching their highest since mid-2009 and long-dated yields falling, as investors braced for a rate increase and the potential for a more aggressive pace of future tightening.

Prices on benchmark 10-year Treasuries rose 2/32 to yield 2.589 percent, from 2.595 percent late on Tuesday.

Additional reporting by Sam Forgione in New York, Marc Jones and Ritvik Carvalho in London, Editing by Jeremy Gaunt; Editing by Nick Zieminski

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