* Dollar up before start of Fed meeting, sterling falls
* Wall Street seen following U.S. shares lower
* Oil falls as OPEC says stocks still rising despite output cuts
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Nigel Stephenson
LONDON, March 14 (Reuters) - The dollar rose before the start on Tuesday of a Federal Reserve policy meeting expected to raise U.S. interest rates, while European shares fell as investors faced a week packed with political and market risks.
Wall Street looked set to follow Europe lower, index futures showed , having traded in a very tight range on Monday with eyes on the Fed.
The U.S. central bank said in a statement its two-day meeting would go ahead as planned, dispelling doubts policymakers would brave a snowstorm hitting Washington.
While the Fed meeting is the focus for markets this week, investors also have to assess the impact of central bank meetings in Britain and Japan, a gathering of G20 finance chiefs, U.S. President Donald Trump’s first budget and a tense election in the Netherlands.
“With a busy calendar of geopolitical events coming up, in particular across the euro zone, investors could be seen to be taking some risk off the table with several potentially volatile events lined up,” Charles Hanover Investments partner Dafydd Davies said.
A Fed rate rise on Wednesday is seen as all but certain and investors will focus on new economic forecasts and any clues as to how many rate hikes can be expected this year.
The dollar index, which measures the greenback against six other major currencies, rose 0.3 percent.
The euro fell 0.2 percent to $1.0629 while the yen was flat at 114.90.
Sterling fell 0.6 percent to $1.2136, having dropped as far as $1.2107, its weakest since Jan. 17, reversing gains chalked up on Monday when Scotland’s leader demanded a new referendum on independence but not before autumn 2018.
“The big question is ‘does the Fed become even more hawkish and point towards the possibility of more than three rate hikes?',” said Constantin Bolz, head of currency strategy at UBS Wealth Management in Zurich.
“That would be dollar-positive. But if they do it like they usually do -- deliver a hike today but keep the promise to hike very gradually -- then the dollar could rather give back a little bit.”
The pan-European STOXX 600 share index fell 0.3 percent, led lower by a 1 percent fall in banks.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.2 percent, while Japan’s Nikkei closed down 0.1 percent.
Shares in Toshiba Corp. closed up 0.5 percent after plunging as much as 8.8 percent, their biggest one-day loss for almost a month.
Toshiba failed to submit audited third-quarter earnings for a second time on Tuesday, gaining a one-month extension, and said it would speed up looking at whether to sell a majority of its U.S. nuclear unit Westinghouse.
China’s blue-chip CSI300 index dipped 0.1 percent after data showing investment was higher than forecast in the first two months of the year.
Yields on benchmark 10-year German government bonds , seen as one of the world’s safest assets, briefly hit 14-month highs above 0.5 percent.
Traders cited a slight easing of concern over the Dutch election after a poll on Monday showed Prime Minister Mark Rutte’s conservatives increasing their lead over nationalist Geert Wilders’s Party for Freedom (PVV), compared with the pollster’s previous survey.
The move later reversed, however, and German yields last stood at 0.46 percent, down 2 basis points on the day.
Oil fell to 3-1/2-month lows after the Organization of the Petroleum Exporting Countries (OPEC) reported oil stocks were still rising despite agreed output cuts.
Brent, the international crude benchmark, traded 60 cents lower at $50.75 a barrel.
Gold was flat at $1,203 an ounce.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Additional reporting by Nichola Saminather in Singapore, John Geddie, Jemima Kelly, Kit Rees and Jamie McGeever in London; Editing by Catherine Evans)