* Fed seen hiking rates for first time since 2006
* European shares rise, Wall Street expected to follow
* Dollar flat as traders stick on the sidelines
* Oil loses 2 percent again after jump on Tuesday
* MSCI Asia-Pacific index up 2 pct, Nikkei gains 2.5 pct
* Treasury yields nudge higher, Bund yields sag
By Marc Jones
LONDON, Dec 16 (Reuters) - Shares rose and bond markets and the dollar were steady on Wednesday as investors readied for what is expected to be the first rise in U.S. interest rates in almost a decade.
After more than a year of posturing and a couple of false starts, the Federal Reserve is seen raising its rates USFOMC=ECI by a token 25 basis points at 1900 GMT.
It will be a highly symbolic move, coming seven years to the day since the U.S. central bank cut them to zero as the post-Lehman crash financial crisis engulfed the world and sent economies spinning into recession. urn:newsml:reuters.com:*:nL1N1441IT
"It is a foregone conclusion that the Fed is going to raise rates," said Kully Samra, a managing director at U.S. focused investment manager Charles Schwab (N:SCHW) in London.
"But I'm pretty sure too that Janet Yellen is going to use the word gradual (in reference to the possible pace of future hikes) quite a few times during the press conference."
That hope that the Fed will stress a softly softly approach was helping soothe jittery markets that have been roiled again over the last couple of weeks by a fresh slump in oil prices and move down in China's increasingly influential yuan.
Wall Street was expected to open around 0.5 percent higher ESc1 and European shares .FTEU3 0#.INDEXE were up 0.6 percent as reassuring economic data helped the main bourses consolidate sharp gains made on Tuesday. ECONG7
Growth in Germany's private sector slowed a tad this month Markit's PMI survey showed, but it remained a high enough level to suggest Europe's biggest economy will see robust demand going into the new year. urn:newsml:reuters.com:*:nL9N13J02X
Number two economy, the UK, also saw its unemployment rate unexpectedly fall again although wage growth remained tepid, while Switzerland business confidence jumped too. urn:newsml:reuters.com:*:nU8N11S03H urn:newsml:reuters.com:*:nZ8N12X02E
In the currency market it was mainly fine tuning ahead of the Fed decision.
The dollar edged back from a near one-week high versus a basket of other major currencies .DXY with Citi, the FX market's single biggest player, saying positioning in the dollar against the euro was effectively neutral now after a clearout over the past fortnight.
"Markets are going into the announcement expecting a rate hike but, on the surface at least, relatively relaxed that it is priced in," added Kit Juckes, a strategist at Societe Generale (PA:SOGN) in London.
The euro was buying $1.0916 EUR= , the dollar fetched 121.80 yen JPY= and Britain's sterling GBP= hovered just above $1.50. FRX/
READY, FEDY, GO
Oil prices, which have been the other main obsession for investors in recent weeks because of the pressure it puts on producers countries and global inflation, slid back again in early European trading.
West Texas Intermediate (WTI) CLc1 fell 13 cents to $37.14 a barrel and Brent LCOc1 was down 85 cents at $37.60 to leave them heading back towards Monday's 7-year lows. O/R
Gold XAU= rose to 1,065 an ounce and in Asia overnight, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had jumped 2 percent as the region caught up the previous session's rallies in Europe and on Wall Street.
Japan's Nikkei .N225 surged 2.6 percent, rebounding from a two-month low struck the day before as risk sentiment has blown hot and cold ahead of one of the most-anticipated market events this year.
Australian shares .AXJO jumped 2.4 percent, while Shanghai stocks .SSEC edged up a more cautious 0.2 percent as another tick down in the yuan CNY=CFXS kept investors guessing on Beijing's plans for the traditionally controlled currency.
"A lot of capital will be looking for a temporary home outside of the U.S. so as to avoid the likely increase in volatility after the (Fed rate hike) hammer falls," said Martin King, co-managing director at Tyton Capital Advisors.
"And in the context of our current world markets, for many Japan looks like a credible home."
Asia's gains helped emerging market stocks .MSCIEF climb 1.2 percent as they gunned for their second consecutive rise having been bashed by nine straight falls before that.
In the bond markets, both 2- and 10-year Treasury yields US2YT=RR US10YT=RR rose fractionally ahead of the Fed decision and after stable U.S. consumer price data had reinforced the case for a hike. US/
It was a different story in Europe though. Benchmark German Bund yields dipped along with the rest of the euro zone. In sharp contrast to the Fed, the ECB has said it is prepared to continue easing its policy if necessary. GVD/EUR
"The cyclical differences are more pronounced between monetary policy and the inflation outlook between the U.S. and the euro zone than in the past," said Dirk Schumacher, an economist at Goldman Sachs (N:GS) in Frankfurt.
"But it is certainly not unprecedent that the Fed moves first."
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http://link.reuters.com/dub25t Currencies vs dollar
http://link.reuters.com/tak27s Oil prices
http://link.reuters.com/beb23v
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