Wall Street opens higher ahead of Fed meeting

NEW YORK (Reuters) - Stocks advanced on Tuesday, putting the S&P 500 on track for its fourth straight gain on increased hopes for central bank stimulus measures ahead of the Federal Reserve's policy meeting.

The Federal Open Market Committee begins the first day of a two-day meeting on interest rate policy, with expectations increasing that the U.S. central bank may extend its "Operation Twist" program, its effort to drive down long-term borrowing costs.

"It's a little bit of anticipation ahead of the Fed meeting," said Fred Dickson, chief market strategist at D.A. Davidson & Co of Lake Oswego, Oregon.

"To look at it, I would say 90 percent of it is Fed action, a little bit is maybe progress in Greece toward forming their government and a successful Spanish auction but at high yields."

Spain's short-term borrowing costs rose to their highest level since 1997 after it raised 3 billion euros at a short-term debt sale, and yields on its 10-year bond remained above the troublesome 7 percent mark, which has resulted in a bailout for other countries.

In Greece, political leaders raced to build a coalition government led by conservative New Democracy leader Antonis Samaras, that would seek to renegotiate the terms of Greece's 130 billion euro EU/IMF bailout agreement.

The PHLX Europe sector index gained 1.5 percent.

The Dow Jones industrial average gained 72.01 points, or 0.57 percent, to 12,813.83. The Standard & Poor's 500 Index rose 7.80 points, or 0.58 percent, to 1,352.58. The Nasdaq Composite Index climbed 16.68 points, or 0.58 percent, to 2,912.01.

Oracle Corp rose 5.1 percent to $28.51 as the top boost to the Nasdaq 100 index after it reported stronger-than-expected quarterly profit after the bell on Monday, releasing the results three days ahead of schedule after news of the pending departure of a senior sales executive fueled concerns that business was stagnating.

Walgreen Co tumbled 4.9 percent to $30.39 as the biggest drag on the benchmark S&P 500 index after the pharmacy chain reported quarterly earnings and said it would buy a 45 percent stake in KKR & Co-backed Alliance Boots for $6.7 billion in a cash and stock deal.

FedEx Corp added 0.6 percent to $89 after the package delivery company reported fourth-quarter earnings and provided an outlook for the first-quarter and 2013.

Economic data showed U.S. housing starts fell 4.8 percent in May but permits to build rose to the highest level in over three years, as the housing market continues to struggle to return to health.

(Reporting By Chuck Mikolajczak, editing by Dave Zimmerman)

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