* Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, March 16 (Reuters) - Global stocks hit their highest levels in over three weeks on Tuesday, as investors bet the U.S. Federal Reserve and other central banks meeting this week will keep policies accommodative to help drive a post-pandemic global economic recovery.
European shares extended a rally that began on Wall Street on Monday and continued into Asia, with the pan-region STOXX 600 index .STOXX up 0.6% by midday in London. On Monday, the index .STOXX touched its highest in more than a year. .EU
E-mini futures for the S&P 500 ESc1 hit a record high, gaining 0.1%.
MSCI's All Country World Index, which tracks stocks across 49 countries, rose 0.3% to its highest since Feb. 22. .MIWD00000PUS
"The stock markets have kept their spirits up ahead of tomorrow's important Fed announcement," said Karl Steiner, chief quantitative strategist at SEB.
On Monday, the S&P 500 and Dow Jones Industrial Average both soared on gains in travel stocks as mass vaccinations in the United States and congressional approval of a $1.9 trillion aid bill fueled investor optimism.
Longer-term U.S. Treasury yields slipped further on Tuesday, as the market looked ahead to government debt auctions and the Fed's two-day policy meeting, which will conclude on Wednesday. benchmark 10-year yield US10YT=RR , which reached a more than one-year high of 1.642% last week, was back at 1.6004%.
The earlier surge in yields stemmed from investors speculating that rising inflation expectations could prompt the Federal Open Market Committee to signal it will start raising rates sooner than expected.
"We think the FOMC will have a hard time expressing concern about asset markets with the S&P at an all-time high on 12 March, despite 10Y U.S. Treasury yields at post-February 2020 highs," said analysts Steve Englander and John Davies at Standard Chartered (LON: STAN ).
"Focus has been on the FOMC ‘dot plot' in recent days, but if the FOMC and Fed Chair (Jerome) Powell do not push back against current yield levels, investors are likely to take yields higher as better data arrives," they added, referring to the Fed's diagram showing interest rate expectations of its policymakers.
Fed policymakers are expected to forecast the U.S. economy will grow in 2021 by the fastest rate in decades, as it recovers from a coronavirus-stricken 2020. Bank of England also meets this week on Thursday and the Bank of Japan wraps up a two-day meeting on Friday.
On Wall Street, the Dow Jones Industrial Average .DJI rose 174.82 points, or 0.53%, to 32,953.46, the S&P 500 .SPX gained 25.6 points, or 0.65%, to 3,968.94 and the Nasdaq Composite .IXIC remained unchanged. shares .SPCOMAIR rose as the companies pointed to concrete signs of an industry recovery as vaccine rollouts help spur leisure bookings. outlook for post-pandemic recoveries continued to diverge between the United States and Europe.
President Joe Biden's order to make vaccinations available to all adults by May 1 contrasted with stuttering rollouts in Germany, France and elsewhere, where use of the AstraZeneca AZN.L vaccine has been suspended amid concern over possible side effects. Kyle Rodda, an analyst at IG Markets, said the prospect of a slower economic recovery in Europe didn't appear to be a major handicap for investors.
"It doesn't seem to be the view that this is a real risk," he said. "Investors are wary, but not worried."
In currencies, the U.S. dollar held small gains from overnight, with caution evident ahead of the central bank meetings.
The dollar was largely flat at 109.06 yen JPY= , after rising as high as 109.365 on Monday for the first time since June.
The euro EUR= was little changed at $1.1946, holding for an eighth session below the $1.20 level.
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http://tmsnrt.rs/2ihRugV Global asset performance
http://tmsnrt.rs/2yaDPgn Federal Open Market Committee Projections
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