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GLOBAL MARKETS-Stocks gain on U.S. housing data, German morale; bonds fall

* All eyes on Fed decision later, statement at 1900 GMT

* U.S. housing starts hit highest level in almost 6 years

* U.S. government debt falls

* Dollar gains against euro as U.S. Treasury yields rise

By Herbert Lash

NEW YORK, Dec 18 (Reuters) - Global equity markets rose on Wednesday on a strengthening U.S. housing market and improving German business morale, while U.S. Treasury prices fell ahead of a Federal Reserve decision on whether to finally begin to unwind its stimulus.

U.S. housing starts in November surged to their highest level in nearly six years as they jumped 22.7 percent to post their biggest gain since January 1990, the Commerce Department said.

The housing news follows other recent data signaling strength in the economy, including growth in jobs and retail sales, that might nudge the Fed into announcing a pullback to its bond-buying program when it concludes a two-day policy-setting meeting later in the afternoon.

Fed Chairman Ben Bernanke will follow the 2 p.m. (1900 GMT) policy announcement with his final press conference at the helm of the U.S. central bank at 2:30 p.m.

But many expect the Fed to stand pat with its asset purchases of $85 billion a month and will wait to "taper" until either January or March when policymakers again meet.

"If they taper, the market might perceive this as 'the economy is good,' and if they don't, everybody still likes the stimulus," said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.

MSCI's all-country world equity index rose and the pan-European FTSEurofirst 300 index of leading regional shares extended gains after think tank Ifo reported German business morale in December was at its highest since April 2012.

The FTSEurofirst 300 rose 0.85 percent to close at a provisional 1,258.91 points, and the euro zone's blue-chip Euro STOXX 50 index jumped 1.13 percent.

The Ifo report was another sign that growth in Germany, Europe's largest economy, may accelerate next year after a relatively subdued 2013.

U.S. stocks initially rose, but the Nasdaq fell and the benchmark S&P 500 traded just below break-even, led by a decline in Apple Inc.

Contract electronics maker Jabil Circuit Inc, whose customers include Apple, on Tuesday forecast results this quarter well below Wall Street estimates, sending its stock down 21 percent.

The Dow Jones industrial average rose 29.06 points, or 0.18 percent, to 15,904.32. The S&P 500 lost 0.87 points, or 0.05 percent, to 1,780.13 and the Nasdaq Composite dropped 16.226 points, or 0.4 percent, to 4,007.455.

U.S. government debt fell on the housing data.

Benchmark 10-year Treasury notes fell 12/32 in price to yield 2.8867 percent, toward the high end of a recent range.

German bonds initially rose after news that Germany plans to cut debt issuance to the lowest level since 2007 next year. But gains were limited as investors awaited the Fed's decision.

German Bund futures settled down 15 ticks at 140.14, after earlier rising as high as 140.49.

The dollar rose against the euro, helped by the rise in U.S. Treasury yields.

The euro slipped 0.04 percent to $1.3761, while the dollar index rose 0.03 percent to 80.085.

Brent oil futures held above $108 a barrel, with investors reluctant to lock in positions ahead of the Fed decision.

Brent crude rose 98 cents to $109.42 a barrel, and U.S. oil rose 12 cents to $97.34 a barrel.