European stocks climb on Greek hopes; U.S. awaits Fed

NEW YORK (Reuters) - Stocks in Europe marched to multi-year highs on Wednesday as investors shrugged off uncertainty over Greece's negotiations with its creditors.

Wall Street, meanwhile, was held in check ahead of the release of minutes of the Federal Reserve's January meeting at 2 p.m. as investors await clues on the U.S. central bank's plans to raise interest rates.

The Greek government said it will request a loan extension for up to six months on Thursday but Germany said no such deal is on the table and Greece must stick to the terms of its bailout.

The European Central Bank, meanwhile, faces resistance from Germany to allowing any extra emergency lending for Greek banks, people familiar with the matter said.

"A lot of people are focused on the Fed minutes but that issue is kind of interwoven with the situation in Europe," said David Lebovitz, global market strategist at J.P. Morgan Funds in New York.

"The massive amounts of monetary stimulus that have been deployed abroad are continuing to put upward pressure on the U.S. dollar, and I think that will make it hard for the Fed to raise rates."

The flip side of investors' appetite for risk saw increased selling of core government bonds, pushing the yield on benchmark 10-year U.S. Treasuries to its highest since the first trading day of the year.

MSCI's all-country world stock index <.MIWD00000PUS> edged up 0.04 percent, while benchmark 10-year U.S. Treasury notes were up 6/32 in price to yield 2.1238 percent after touching a high of 2.164 percent.

Producer price data for January indicated U.S. inflation remained subdued, which could boost the argument against a rate hike by the Fed, while other economic data pointed to a slowly accelerating U.S. economy.

The Dow Jones industrial average <.DJI> fell 46.16 points, or 0.26 percent, to 18,001.42, the S&P 500 <.SPX> lost 6.17 points, or 0.29 percent, to 2,094.17 and the Nasdaq Composite <.IXIC> dropped 8.09 points, or 0.17 percent, to 4,891.18.

The FTSEuroFirst 300 index <.FTEU3> of leading European shares rose 0.7 percent to a fresh seven-year high of 1,516.81. Greek stocks recovered some of this week's losses to trade 1.1 percent higher <.ATG>.

Brent crude oil was down 1.4 percent at $61.68 a barrel after rallying earlier in the week amid threats to Middle East production and a falling U.S. rig count. Brent is up around 35 percent from its low of near $45 a barrel barely a month ago.

U.S. crude was off 0.9 percent to $53.04 after weekly inventory data.

(Additional reporting by Ryan Vlastelica; Editing by James Dalgleish)

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