LONDON – The S&P 500 and the Dow saw a muted open Tuesday as investors remained on the sidelines ahead of the Federal Reserve’s two-day policy meeting against the backdrop of rising borrowing costs.

On Wall Street, the Dow Jones Industrial Average rose 13.3 points, or 0.04 percent, at the open to 32966.75. The S&P 500 rose 4.7 points, or 0.12 percent, at the open to 3973.59, while the Nasdaq Composite rose 63.5 points, or 0.47 percent, to 13523.173 at the opening bell.

Elsewhere, global stocks hit their highest levels in over three weeks on Tuesday.

European shares extended a rally that began on Wall Street on Monday and continued into Asia, with the pan-region STOXX 600 index up 0.6 percent by midday in London. On Monday, the index touched its highest in more than a year.

Britain’s FTSE 100 index rose 0.9 percent, hitting its highest in nearly 2 months. Germany’s DAX gained 0.6 percent, France’s CAC 40 0.2 percent and Italy’s FTSE MIB 0.6 percent.

E-mini futures for the S&P 500 hit a record high, gaining 0.1 percent.

MSCI’s All Country World Index, which tracks stocks across 49 countries, rose 0.3 percent to its highest since Feb 22.

“The stock markets have kept their spirits up ahead of tomorrow’s important Fed announcement,” said Karl Steiner, chief quantitative strategist at SEB.

An index of Asia-Pacific share markets excluding Japan gained 0.65 percent, led by a 0.8 percent jump in Australia’s benchmark S&P/ASX 200 index.

Japan’s Nikkei 225 gained 0.5 percent to just below the 30,000 mark. The broader Topix added 0.65 percent.

Chinese mainland blue-chip CSI 300 index climbed 0.87 percent and Hong Kong’s Hang Seng gained 0.67 percent.

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 US$1.9 trillion aid bill fueled investor optimism.

Longer-term US 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.

The benchmark 10-year yield, which reached a more than one-year high of 1.642 percent last week, was back at 1.6004 percent.

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 US Treasury yields at post-February 2020 highs,” said analysts Steve Englander and John Davies at Standard Chartered.

“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 US economy will grow in 2021 by the fastest rate in decades, as it recovers from a coronavirus-stricken 2020.

The Bank of England also meets this week on Thursday and the Bank of Japan wraps up a two-day meeting on Friday.

The outlook for post-pandemic recoveries continued to diverge between the United States and Europe.

US 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 vaccine has been suspended amid concern over possible side effects.

However, 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 US dollar held small gains from overnight, with caution evident ahead of the central bank meetings.

The dollar was largely flat at 109.06 yen, after rising as high as 109.365 on Monday for the first time since June.

The euro was little changed at US$1.1946, holding for an eighth session below the US$1.20 level.

Bitcoin slid 0.5 percent to US$55,354.48. The cryptocurrency hit US$61,781.83 on Saturday.

US West Texas Intermediate crude for April changed hands at US$64.51 a barrel, down 1.3 percent. Brent crude futures for May stood at US$67.88 a barrel, losing 1.34 percent.