European equities climb before Fed decision

LONDON (AFP) - European stock markets advanced Tuesday after overnight gains on Wall Street, with investors awaiting the latest Federal Reserve monetary policy meeting and another crucial Brussels meeting on Greece.

London's benchmark FTSE 100 index gained 0.38 percent to 5,615.08 points, in Paris the CAC 40 was up 0.82 percent to 3,922.71 points and Frankfurt's DAX 30 rose 0.73 percent to 5,946.94 points.

The Stoxx 50 index of top eurozone shares won 0.70 percent to 2,890.73 points.

Wall Street's Dow Jones index had risen slightly on Monday as investors treaded water on the eve of the Fed decision and digested a new financial-sector reform plan in the Senate.

The Dow Jones Industrial Average gained 0.16 percent to 10,642.15, extending the blue-chip rally to the fifth session in a row.

"Corporate news is still thin on the ground and the bulk of today's bounce back can be put down to a recovery by US stocks on Monday," said IG Index analyst David Jones.

"With the latest interest rate decision expected from the Federal Reserve this evening, after the UK market has closed, we could be in for a quiet day as investors wait to hear what the current official view is on the state of the US economy."

The US central bank's Federal Open Market Committee (FOMC) was widely expected to keep its key lending rate at virtually zero percent later Tuesday as markets also look for signals of future monetary policy tightening.

The Fed had held the federal funds rate -- which affects the rate banks charge each other for overnight loans -- at an unprecedented zero to 0.25 percent range since December 2008 to help the economy recover from its worst financial crisis in decades.

Elsewhere on Tuesday, finance ministers from the 27-nation European Union gathered in Brussels to examine last-resort eurozone plans to rescue Greece, if necessary, with billions of euros in crisis loans.

Eurozone finance ministers had on Monday agreed the shape of a Greek rescue that could "rapidly" plug future gaps in Athens' battle to control its badly skewed finances.

"The announcement by eurozone finance ministers of a stronger support package for Greece is another small positive step," said economist Ben May at the Capital Economics consultancy in London.

"Although the precise details are still unclear, the package will take the form of direct loans from all other eurozone countries, rather than state guarantees for loans as had been widely speculated over recent weeks."

He added, however, that the plan was shrouded in uncertainty.

"There is still much uncertainty over exactly how the package would work, not least over what would actually trigger it.

"It is possible that further details may be revealed after this morning's EU27 finance ministers meeting."

May added: "While explicit support could still be some way off, the latest announcement is a step forward."

With ministers expected to echo their eurozone counterparts by endorsing the measures, Athens has already undertaken to curb spending and raise taxes. The onus will be on Greece to maintain a firm watch on national budget surgery.