Stocks advanced on Tuesday, although they eased off session highs, on tentative hopes the U.S. Federal Reserve will offer more economic stimulus and signs of progress in Greek debt talks.

Greece promised further cuts to its bloated public sector on Tuesday before a second conference call with its international lenders, whom Athens must persuade to extend more loans to avoid bankruptcy next month.

Nine of the S&P 500's 10 sectors rose in the broad-based rally, but defensive sectors such as utilities, telecommunications and health care were the biggest advancers, indicating some investor nervousness.

It's head fakes every day, based on whether they think Greece is going to default, whether they think Italy is going to default, and what not, said Uri Landesman, president of Platinum Partners in New York.

So when you see people jump in, it's not with both feet, it's maybe with a big toe -- and the way you jump in with a big toe is to buy the defensives more than more cyclical, high-beta sectors.

AT&T Inc rose 1.9 percent to $29.13, while Celgene Corp surged 7.2 percent to $65.61 ahead of a review by European regulators of the biopharmaceutical company's multiple sclerosis drug Revlimid.

At the Fed's two-day meeting that started Tuesday, the central bank is expected to try to push already low long-term interest rates even lower by tilting toward longer-duration bonds in its portfolio, a move known as Operation Twist.

There is more risk than not. You have risk even if it's pretty good, they sell the news, which happens a lot -- good news from the Fed is being discounted, not great news, Landesman said.

Meanwhile, U.S. markets also took their cue from buoyant European dividend-paying shares, which were able to withstand the initial shock of Standard & Poor's downgrade of Italy's credit rating. <.EU>

The Dow Jones industrial average <.DJI> gained 110.08 points, or 0.97 percent, to 11,511.09. The Standard & Poor's 500 Index <.SPX> climbed 9.19 points, or 0.76 percent, to 1,213.28. The Nasdaq Composite Index <.IXIC> added 3.89 points, or 0.15 percent, to 2,616.72.

Earlier in the session, all three major U.S. stock indexes were up 1 percent, with the Dow industrials climbing as high as 11,550.22, while the S&P 500 rose as high as 1,220.39. The Nasdaq had touched an intraday high at 2,643.37.

Apple Inc again hit an all-time intraday high, up

almost 3 percent to reach $422.86, before easing to $416.87. Wedbush Securities added the stock to its best ideas list.

Among technology stocks, International Business Machines also gained 1.8 percent to $176.31 as the top performer on the Dow after offering concessions to settle an EU investigation into its business practices.

Data that showed U.S. housing starts declined more than expected in August failed to catch much attention from the market.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)