World stocks rose from the previous day's four-week low on Wednesday while the dollar slipped ahead of a policy decision by the Federal Reserve, expected to affirm its commitment to ultra-low interest rates.

A survey showed the euro zone's dominant service sector expanded for the second consecutive month and at its fastest pace in 22 months, adding to encouraging economic signs, though Germany's expanded at its slowest rate in three months.

The Fed is expected to pledge to hold benchmark interest rates exceptionally low for an extended period while acknowledging some positive economic development.

The Fed is unlikely to offer any hints into the timing of an exit strategy and eventual rate rises, which may help stocks to rise and consequently boost (the euro), said Antje Praefcke, currency strategist at Commerzbank in Frankfurt. The MSCI world equity index <.MIWD00000PUS> rose 0.7 percent while the FTSEurofirst 300 index <.FTEU3> gained 0.9 percent.

Markit's final euro zone services purchasing managers' index of around 2,000 companies rose in October to 52.6, its highest reading since December 2007, up from 50.9 in September.

That was revised up from forecasts and a flash reading of 52.3.

Emerging stocks <.MSCIEF> rose 1.6 percent.

M&A BOOST

Tuesday's news that Warren Buffett's Berkshire Hathaway agreed to buy Burlington Northern Santa Fed Corp in a deal that values the railroad company at $34 billion was seen as a sign corporate merger and acquisition activity is picking up, given low valuations.

More takeover deals would encourage investors to buy companies seen as potential targets in aid of benefitting from the eventual deal. It may also signal buyers are more optimistic about the economy and financing.

U.S. crude oil rose 0.7 percent to $80.15 a barrel. Spot gold hit record high of $1,091.60 an ounce, helped by a weaker dollar and news that the Reserve Bank of India bought 200 tonnes of gold from the IMF for $6.7 billion.

This fueled speculation that other governments -- including China -- may be ready to diversify their reserves even at near-record gold prices, helping soak up IMF supply that the fund may otherwise be forced to sell on the open market.

The December bund futures fell 43 ticks as riskier assets advanced.

The dollar <.DXY> fell 0.3 percent against a basket of major currencies while the euro rose 0.2 percent to $1.4767.

Conversely a more hawkish message by the Fed would present the dollar with some potentially strong tailwinds, and would make euro/dollar vulnerable to a pullback below $1.46, Lloyds TSB said in a note to clients.

(Additional reporting by Naomi Tajitsu; editing by Patrick Graham)

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