Equities higher before Fed, German ruling

NEW YORK (Reuters) - Stocks were higher on Tuesday, with investors expecting quiet trading ahead of a key decision by a German court and possible policy action from the Federal Reserve that could point to more monetary stimulus.

Wall Street's advance was led by energy and financial names, but volume was light with a busy calendar ahead later in the week.

"I wouldn't trust anything that happens today as an investor or trader," said Tom Alexander, head of Alexander Trading, in Savannah, Georgia. "The markets are probably going to be rotational. The most important is going to be the Fed, what they do immediately and what they plan to do going forward."

Last week, equities rallied on expectations for fresh stimulus measures from central banks, with economists forecasting a 60 percent chance the Fed will announce another round of quantitative easing at the conclusion of its two-day meeting this Thursday.

Germany's Constitutional Court on Wednesday is expected to approve the European Stability Mechanism -- the euro zone's new bailout fund -- but legal experts believe it will impose tough conditions limiting Berlin's flexibility on future rescues. A more stringent ruling could be seen as a negative by markets.

Another event which could cause turbulence in markets is a Dutch general election on Wednesday, with voters divided between bailouts for troubled euro zone economies and austerity measures locally.

The Dow Jones industrial average <.DJI> was up 72.32 points, or 0.55 percent, at 13,326.61. The Standard & Poor's 500 Index <.SPX> was up 5.66 points, or 0.40 percent, at 1,434.74. The Nasdaq Composite Index <.IXIC> was up 7.32 points, or 0.24 percent, at 3,111.35.

McDonald's Corp advanced 0.5 percent to $91.72 after the fast-food restaurant chain reported a 3.7 percent rise in August sales at established restaurants around the world, slightly below expectations of a 3.9 percent increase.

Package delivery companies FedEx Corp and United Parcel Service Inc have received approval to provide express-package services in some cities of China on their own, the country's State Postal Bureau (SPB) said on its website last week. FedEx gained 0.9 percent to $88.77 and UPS rose 0.6 percent to $73.52.

Knight Capital Group Inc said it has hired International Business Machines Corp to look into the August 1 trading glitch that cost the trading firm $440 million and forced it to accept a $400 million investment from a group of financial companies to keep it afloat. Knight shares gained 3 cents to $2.70 while IBM rose 0.8 percent to $202.74.

Zynga Inc's chief marketing officer resigned on Monday, becoming the latest senior executive to depart the struggling social games company behind popular Facebook Inc games such as Farmville. Zynga shares dropped 0.7 percent to $2.80.

(Editing by Dave Zimmerman)

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