Stocks rose on Wednesday after data showed consumer prices did not overheat in November, quelling inflation worries, while housing data pointed to sustained recovery ahead of a Federal Reserve statement on the condition of the U.S. economy.

Upbeat economic data and a dip in the U.S. dollar <.DXY> lifted commodity prices across the board, driving the S&P materials sector <.GSPM> up 1.3 percent. U.S. Steel Corp rose 2.2 percent to $49.30 and was among the top gainers after a brokerage raised its rating on the stock to buy.

Advanced Micro Devices Inc rose 5.2 percent to $9.27 after the Federal Trade Commission sued rival chipmaker Intel Corp , charging anti-competitive conduct. Intel slipped 0.7 percent to $19.67.

The Dow Jones industrial average <.DJI> gained 45.27 points, or 0.43 percent, to 10,497.27. The Standard & Poor's 500 Index <.SPX> rose 6.36 points, or 0.57 percent, to 1,114.29. The Nasdaq Composite Index <.IXIC> added 17.19 points, or 0.78 percent, to 2,218.24.

The Labor Department said the Consumer Price Index rose 0.4 percent on a seasonally adjusted basis after an unrevised 0.3 percent gain in October.

In spite of higher oil prices this fall, it seems like inflation is still relatively tame, and that's one of the big issues for both the consumer and businesses, said Kim Caughey, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

On Tuesday, the government said U.S. producer prices jumped a surprising 1.8 percent last month, and industrial output rose firmly, sparking inflation jitters in financial markets.

Separately, data showed Wednesday that housing starts rose to a seasonally adjusted annual rate of 574,000 in November at the fastest rate since May, and building permits increased at their fastest clip since November 2008.

The Federal Open Market Committee will end a two-day policy-setting meeting later Wednesday that is likely to show central bank officials are more upbeat about the economy, but not enough to tighten loose borrowing costs that have encouraged risk-taking, economists say.

I don't think people are anticipating a change in rates, maybe a change in language. That kind of takes some downward pressure away from this afternoon's anticipated release from the Fed, Fort Pitt's Caughey said.

Looking ahead to 2010, U.S. stocks are expected to rise for a second straight year as the economic and profit outlook brightens, a new Reuters poll finds.

Financial stocks were also in focus after sources said global regulators would give banks a grace period before forcing them to implement stricter capital rules, easing concerns they might need to issue stock in the near future.

The Dow Jones Titans Bank index <.DJTBAK>, which tracks big banks worldwide, rose 1.4 percent.

(Editing by Jeffrey Benkoe)

Inflation