The Federal Reserve was expected to hold a steady course on monetary policy on Tuesday, acknowledging a mildly brighter economic outlook while refraining from any suggestion that further easing is now off the table.

Investors awaited February retail sales, due at 1230 GMT, with economists in a Reuters survey expecting a 1.0 percent rise compared with a 0.4 percent increase in January. Excluding automobiles, sales are expected to rise 0.7 percent, a repeat of the January increase.

The Fed will release on Thursday the results of its latest round of stress tests on 19 large banks, the regulator said on Monday. The test will gauge the ability of banks to withstand a financial shock that includes unemployment hitting 13 percent and a 21 percent drop in housing prices.

Pfizer Inc (PFE.N), the world's largest drugmaker, has scrapped a deal to sell insulin products made by Biocon Ltd (BION.NS), leaving India's biggest biotech company without a partner to sell the drugs in key global markets such as the United States.

Shares in Dutch parcel-delivery firm TNT Express (TNTE.AS) dipped after sources said United Parcel Service (UPS.N) will only sweeten its $6.4 billion bid by a symbolic amount at best.

Apple Inc (AAPL.O) and Motorola Mobility (MMI.N) held talks on a cross-licensing deal to settle smartphone patent infringement lawsuits, a move that could have benefited all of the companies that use Google's (GOOG.O) Android software, according to the European Union.

Urban Outfitters Inc (URBN.O) said full-price selling in the current quarter has improved sequentially, but it expects discounting to remain higher than last year.

Anadarko Petroleum Corp (APC.N) on Monday forecast its total capital expenditures for the year will rise as much as 13 percent as the exploration and production company pursues more profitable crude oil output from developments in the Gulf of Mexico and offshore Africa.

Gold ticked higher on Tuesday as the euro rebounded although trading was cautious with investors waiting for the outcome of a Federal Reserve meeting, which could offer clues over the direction of interest rates in the world's largest economy.

The dollar rose to an 11-month high versus the yen on Monday as reduced expectations for additional monetary stimulus continued to boost the greenback and after traders targeted stop-loss buy orders.

Defensive names rallied in an otherwise flat day for Wall Street on Monday as investors paused after recent gains and looked ahead to the Federal Reserve's monetary policy statement.

The Dow Jones industrial average .DJI added 37.69 points, or 0.29 percent, to 12,959.71 at the close. The Standard & Poor's 500 Index .SPX inched up just 0.22 of a point, or 0.02 percent, to 1,371.09. But the Nasdaq Composite Index .IXIC dipped 4.68 points, or 0.16 percent, to close at 2,983.66.

(Reporting by Blaise Robinson; Editing by Erica Billingham)

• A Permanent Economic Emergency