Euro rises almost 1 percent and U.S. equities climb

NEW YORK (Reuters) - The dollar weakened broadly on Monday ahead of the Federal Reserve's policy meeting on worries that the U.S. central bank could become more cautious about raising interest rates, while Wall Street stocks rose because the greenback's fall eased worries about the effect on corporate profits.

Oil prices fell again, down about 3 percent on concerns about over-supply, with U.S. crude hitting a six-year low.

The euro, which has lost roughly a quarter of its value against the dollar since mid-2014, rose 0.9 percent to $1.0595 after earlier hitting its lowest level since January 2003. Many investors say the weakness in the currency, which suffered its biggest weekly fall since September 2011 last week, has been overdone.

Comments by Italy's central bank governor that the euro has fallen faster than the European Central Bank expected contributed to the currency's rise on Monday as the European Central Bank launched quantitative easing.

The U.S. dollar index <.DXY>, which measures the greenback against a basket of currencies, fell 0.8 percent.

The strength in the dollar "has put a lot of worry on (equity) investors," said Nick Colas, chief market strategist at brokerage ConvergEx, in New York, noting the currency's impact on the profits of multinational corporations. "We're looking for a floor for the euro and are just happy it's not plummeting like it has been for the last six months."

But European stocks rose on expectations of a weakened euro with the launch of the ECB's bond-buying program.

The pan-European FTSEurofirst 300 index <.FTEU3> gained 1 percent, while Germany's DAX <.GDAXI> rose 2.2 percent to a record high of 12,167.72 before easing slightly. The MSCI International ACWI Price Index <.MIWD00000PUS> was up 0.9 percent.

The Dow Jones industrial average <.DJI> rose 179.98 points, or 1.01 percent, to 17,929.29, the S&P 500 <.SPX> gained 20.44 points, or 1 percent, to 2,073.84, and the Nasdaq Composite <.IXIC> added 41.80 points, or 0.86 percent, to 4,913.56.

The benchmark 10-year U.S. Treasury note was up 9/32, the yield at 2.0787 percent.

Investors were looking ahead to the Fed's policy decision on Wednesday.

"You're going to have a thin market that's pushed around pretty easily" ahead of the Fed's commentary, said Joseph Benanti, managing director at Rosenblatt Securities in New York. Monday's rally is "just a little bit of relief from last week's sell-off."

Many investors expect the Fed to remove its pledge to remain "patient" about raising rates for the first time since 2006. Economists polled by Reuters split almost evenly on whether a rate increase will come in June or later in the year.

U.S. crude dropped 3.3 percent to $43.35 per barrel on expectations of oversupply. The International Energy Agency said on Friday a global glut of oil is growing and U.S. production shows no sign of slowing. Brent was down 3 percent at $53.01.

Gold fell 0.4 percent, the 10th decline in the past 11 sessions. Silver was flat while copper dipped 0.1 percent.

(Additional reporting by Sinead Carew; Editing by Leslie Adler)