LONDON – World equity markets rallied on Wednesday and the dollar eased, with investors appearing to look past another likely rise in US interest rates and hoping for a slowdown in the pace of aggressive monetary tightening.

The Federal Reserve concludes a two-day meeting later in the day and is widely expected to deliver a fourth, 75 basis points (bps)rate hike to contain stubbornly-high inflation.

For markets, the key question is whether the Fed will also signal it could slow additional rate hikes, in a so-called dovish pivot.

"The extreme sensitivity of global assets and the dollar to the theme of a dovish pivot has boosted the notion this will be a make-or-break event for market sentiment," said ING currency strategist Francesco Pesole.

European stock markets opened mostly firmer, Asian shares outside Japan rallied to a two-week high and US equity futures pointed to a firm open for Wall Street.

With a 75 bps increase in the Fed's key rate on Wednesday to a range of 3.75 percent to 4.00 percent priced in, traders are split on the size of a December move and futures market price in a roughly a 40 percent chance of another 75-bps increase.

Data on Tuesday showing a jump in US monthly job openings supported the case for the Fed to remain in the hawkish camp.

Analysts said that uncertainty over how economic data will pan out meant a dovish pivot could still be some way off, leaving risk assets such as stocks vulnerable and the dollar supported.

"We suspect Chair Powell will try very hard to avoid saying anything that might be misconstrued as a signal that the inevitable step down in the size of tightening is a pivot toward the end of the tightening cycle," said Kevin Cummins, chief US economist at NatWest Markets.

"Given that the inflation-related data have yet to show any signs of any moderation, we lean a bit more toward officials holding off from signaling they are reducing the size of hikes just yet."

Cummins expects the Fed to step down to a 50 bps hike in December.

Japan's Nikkei stock index closed flat, holding close its highest levels since September.

In currency markets, the dollar eased 0.25 percent against a basket of major currencies. It fell 0.75 percent against the Japanese yen to 147.16 yen amid fears of intervention from authorities and thin liquidity.

Bank of Japan Governor Haruhiko Kuroda said on Wednesday a tweak to the central bank's yield curve control policy, which has contributed to the weakness in the yen, could become a future option.

The robust dollar has pulled back in October on speculation the Fed might indicate a slowdown in its aggressive tightening campaign.

A Reuters poll found currency strategists thought the dollar's retreat was temporary.

US Treasury yields were largely steady on Wednesday after reversing much of Tuesday's sharp rise on the unexpected strength in the jobs data.

Ten-year Treasury yields hovered around 4.04 percent while two-year yields eased 3 bps to 4.51 percent.

Oil climbed after industry data showed a surprise drop in US crude stockpiles, suggesting demand is holding up.

Brent crude futures were last up 0.25 percent at $94.90, US crude oil futures rose 0.5 percent to $89.76 per barrel.

Gold was slightly higher, with spot price trading at $1,652 per ounce.