GLOBAL MARKETS-Stocks climb out of the red as traders wait on the Fed

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MSCI AxJ index down 1%; gold above $2,000 an ounce

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China and Japan out for holidays

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Fed decision due 1800 GMT, 25bp hike expected

(Adds quote in paragraph 8, updates prices throughout)

By Nell Mackenzie and Tom Westbrook

LONDON/ SINGAPORE, May 3 (Reuters) - U.S. stock futures rose on Wednesday in fragile markets with traders on tenterhooks for any clues from the U.S. Federal Reserve statement today that rate hikes might peak and the soft landing that central banks have been angling for is in sight.

Yields on 2-month U.S. Treasury bills jumped on rising concerns that the U.S. Treasury Department could hit its debt limit earlier than anticipated.

Brent crude, which dropped 5% overnight, fell further and was last down about 3% at $73.04 a barrel.

Tuesday saw a hammering of shares of U.S. regional banks. PacWest Bancorp dropped 27.8%, while Western Alliance Bancorp tumbled 15.1% and Comerica Inc fell 12.4%.

Markets are all but certain the Federal Reserve will announce a 25-basis-point rate hike when it announces its policy decision at 1800 GMT. If that happens, the focus will be on whether or how hard Fed Chair Jerome Powell pushes back on investors' expectations for rate cuts by year's end.

The pan-European STOXX 600 index was up almost 0.5% after Tuesday's sharp selloff. S&P 500 futures edged up 0.1% but the mood was cautious, with banks in the crosshairs.

"It's not clear today whether markets are driven by the debt ceiling, the rout in regional banks or anxiety about the FOMC determinations," said Vijay Modhvadia, managing director of Deuterium Capital Management.

Traders will be combing the Fed's statement for any indication of a rate hike pause, or looking to see if the wording keeps options open for another hike in June, said Modhvadia.

U.S. central bankers will have had an early look at the Senior Loan Officer Opinion Survey, which has not yet been released publicly, he added.

In Europe, where the crisis of confidence in banks forced Credit Suisse into the arms of larger rival UBS six weeks ago, similar data was already public with lenders sharply turning off the credit taps, a report on Tuesday showed, perhaps making a case for a smaller European Central Bank rate hike this week.

"The market consensus is for a soft landing and every hint in that direction, if you trust the Fed and the ECB, should be a source of good news for equities and credit," said Florian Ielpo, head of macro at Lombard Odier Investment Managers.

Markets face a "macro heavy week" said Ielpo, with investors looking back at a strong first quarter earnings season but anticipating that Friday's U.S. jobs report might reveal a deteriorating macro economic situation.

Markets in China and Japan were shut for a holiday. Hong Kong's shares fell, dragging MSCI's broadest index of Asia-Pacific shares, ex-Japan, down about 0.6%.

Bonds and gold held gains. The dollar, slipping, was caught in the crosswinds of falling yields and rising nerves.

EYES ON THE FED

Currency markets were steady and also awaiting direction from the Fed. The euro was last up 0.3% at $1.1030.

Elsewhere, the Australian dollar was flat after the previous day's 0.5% gain following a surprise rate increase from the Reserve Bank of Australia.

Gold hovered above $2,016 an ounce, little changed on the day.

Two-year U.S. treasury yields fell 2 bps to around 3.96% and 10-year yields fell 3 bps to around 3.40% .

Investors have a wary eye on the looming U.S. debt ceiling, with lawmakers squabbling and Treasury Secretary Janet Yellen warning the government might run out of money as soon as June 1.

Top U.S. Senate Republicans on Tuesday called on President Joe Biden to accept their package or make a counter-offer, while a top Democrat said the Senate might try to advance a "clean" debt-ceiling hike next week.

"Either this game is over within a few weeks or we are going to see a suspension of the debt limit until later this year," said Rabobank strategist Philip Marey. "In both cases, we are not likely to see any solution until financial markets start to panic." (Editing by Lincoln Feast and Kim Coghill; Editing by Emelia Sithole-Matarise)