Stocks turn higher ahead of Fed meeting, oil up

NEW YORK (Reuters) - Stock markets around the world rose on Tuesday, adding to earlier gains as investors bet that the U.S. Federal Reserve wouldn't adjust guidance about how soon the central bank would raise interest rates.

There had been speculation that the Federal Reserve could raise interest rates sooner and faster than previously predicted, a theory that has supported the U.S. dollar and pressured equities of late, though U.S. indexes remain near record levels. However, those concerns seemed to fade after the U.S. market opened on Tuesday.

"The rumor is (the Fed) won't change the 'considerable time' language," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey, referring to the Fed's previously stated timeline of when it will raise rates.

"Overall the language that's there now has been positive for the (stock) market," and the rumor "seems to be what shifted the markets' direction today."

The Fed will begin its two-day policy meeting later on Tuesday, and while it has said it doesn't expect to raise rates until 2015, recent strong data has led Fed officials to acknowledge they may need to act sooner than they thought just a few months ago.

The Dow Jones industrial average <.DJI> rose 101.61 points, or 0.6 percent, to 17,132.75, the S&P 500 <.SPX> gained 14.21 points, or 0.72 percent, to 1,998.34 and the Nasdaq Composite <.IXIC> added 22.12 points, or 0.49 percent, to 4,541.02. The benchmark 10-year Treasury note rose 6/32 in price to yield 2.5688 percent.

The gain on Wall Street lifted the MSCI world equity index <.MIWD00000PUS> 0.5 percent, while European shares were down 0.2 percent, having closed before Wall Street's rally. Europe was pressured ahead of a referendum on independence in Scotland, which kept investors on edge with polls suggesting the vote remains too close to call.

Asian shares slipped, with MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> shedding 0.7 percent to its lowest since late June, while Japan's Nikkei <.N225> snapped a five-session winning streak to close down 0.2 percent.

In the currency market, the dollar <.DXY> fell 0.4 percent against a basket of currencies while the euro rose 0.3 percent to $1.2979 against the dollar.

Brent crude rose 1.4 percent to $99.20 per barrel, while U.S. crude futures gained 1.9 percent at $94.69 per barrel, rising on the prospect of a likely supply cut from OPEC.

(Editing by Meredith Mazzilli)

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