Stocks up, US yields at 3% as markets ready for Fed hike

Stocks up, US yields at 3% as markets ready for Fed hike

World stocks rose on Tuesday and US 10-year Treasury yields held above 3 percent as investors prepared for the Federal Reserve's biggest rate hike since 2000.

In a busy week for central bank meetings, Australia's central bank raised its key rate by a bigger-than-expected 25 basis points on Tuesday, lifting the Aussie dollar as much as 1.3 percent and hitting local shares.

On Thursday, the Bank of England is expected to raise rates for the fourth time in a row.

MSCI's benchmark for global stocks gained 0.1 percent by 0813 GMT as European shares rose after surviving a "flash crash" on Monday caused by a single sell order trade by Citigroup.

The pan-European STOXX 600 equity benchmark was up 0.8 percent, bouncing back from Monday's losses with a tech-led rally on Wall Street and supported by upbeat earnings reports and gains in banking stocks tracking higher bond yields.

"These are small flashes of sunshine in the markets. The broader scenario however is not encouraging," said Enrico Vaccari, head of institutional sales at Consultinvest in Milan.

"Even though there's room for stock markets to rally from oversold levels, in the long term the headwinds are too many, simply because the speed of the Fed's rate hikes will drive