Euro falls amid Greek standoff, dollar up ahead of Fed

By Ryan Vlastelica

NEW YORK (Reuters) - The euro fell on Tuesday as it appeared more likely that debt-stricken Greece would default or have to leave the single currency, while the U.S. dollar rose at the start of a meeting by the Federal Reserve.

Stocks mostly rose on the day, with shares in both Europe and the United States rebounding after a two-day decline, though the uncertainty surrounding Greece limited gains.

Prime Minister Alexis Tsipras lashed out at Greece's creditors on Tuesday, accusing them of trying to "humiliate" Greeks, and he defied a drum beat of warnings that Europe is preparing for his country to leave the euro. The address was seen as a sign that Tsipras was unlikely to accept austerity cuts needed to unlock frozen aid and avoid a debt default within two weeks.

"The market is still anxious about Greece and would like the situation to be dealt with one way or another. The week-after-week uncertainty isn't good for the market," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

The euro fell 0.4 percent to $1.1240 while the U.S. dollar index, which measures the greenback against a basket of currencies, rose 0.2 percent. The yen was flat against the dollar.

The all-country MSCI International ACWI Price Index rose 0.2 percent, while the pan-European FTSEurofirst 300 ended 0.6 percent higher, rebounding after a decline of 2.4 percent over the previous two sessions. Shares in Hong Kong fell 1.1 percent.

The Dow Jones industrial average rose 96.52 points, or 0.54 percent, to 17,887.69, the S&P 500 gained 9.3 points, or 0.45 percent, to 2,093.73 and the Nasdaq Composite added 21.99 points, or 0.44 percent, to 5,051.97. The S&P 500 is coming off a two-day decline of 1.2 percent.

U.S. investors were also looking for clues regarding the timing of a rate hike after a two-day Federal Reserve meeting.

The central bank is unlikely to raise rates in this meeting but traders will watch for any hints from Fed Chair Janet Yellen at a news conference after the meeting on Wednesday.

The Fed has said it remains data-dependent and will raise rates only when it sees an improvement in the economy. Second-quarter data pointed to a recovery after a halt in growth earlier in the year.

The benchmark 10-year U.S. Treasury note rose 10/32 in price, pushing the yield down to 2.3200 percent.

In the commodity market, U.S. crude futures rose 0.5 percent to $59.82 per barrel while Brent crude for August delivery was down 0.4 percent at $63.70 per barrel.

Gold prices fell 0.4 percent while silver lost 0.6 percent. Copper lost 1.1 percent in its second straight daily decline of more than 1 percent.

(Additional reporting by Tanya Agrawal; Editing by Nick Zieminski)