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LONDON, Mar 27 (Reuters) European stocks and the dollar fell on Monday, while Treasuries held steady as investors waited for a U.S.

interest rate meeting which is widely expected to bring the 15th straight U.S. rate hike.

Federal Reserve policy makers are seen raising the key U.S.

borrowing rate by 25 basis points to 4.75 percent at the end of a two-day meeting on Tuesday.

U.S. stock futures point to a flat to marginally higher opening on Wall Street as investors there settle to wait for the Fed meeting, the first chaired by new chief Ben Bernanke.

Comments from Bernanke will be closely watched for signs of an end to monetary tightening, especially after weaker than expected U.S. new home sales data last week called into question the durability of the Fed tightening cycle.

''A rate rise in May is more or less factored in but the market is looking for that extra confidence that the Fed will keep raising,'' said Hideaki Inoue, forex manager at Mitsubishi UFJ Trust and Banking.

Crude oil eased below $64 a barrel after Nigerian militants freed three foreign oil workers they had held hostage, while silver rose to its highest in more than 22 years in Asia, touching $10.90 an ounce, and gold rose to three-week highs, despite the weaker dollar.

European shares slipped away from 4-1/2 year highs, despite an early flurry of takeover activity, biding their time ahead of the Fed meeting.

By 1215 GMT the FTSEurofirst 300 was down 2.5 points at 1,381, while Britain's FTSE 100 was down 28 points to 6,008, after touching a fresh 5-year high of 6,047.

Mergers and acquisitions speculation, which has played such a part in stoking recent European stock gains, continued with French consumer electronics giant Thomson rising 7 percent after a newspaper report that investment banks are lining up a bid.

In London mortgage bank Alliance&Leicester jumped 5 percent on talk the bank had turned down a takeover offer. The bank declined to comment.

In Tokyo, the Nikkei average ended up 0.8 percent at 16,686.17 as investors bet companies will benefit from new money coming into the market at the April start of the business year.

Other Asian indexes such as the Kospi, Hang Seng and Straits Times were stronger.

COPPER/OIL SUPPLY CONCERNS Falling stocks and supply disruptions have sparked renewed fund buying for copper, which hit fresh record highs, although some say falling Chinese imports and U.S. home sales could weigh on prices.

Worries about supply were fuelled when more than 1,000 workers at Grupo Mexico's La Caridad copper mine in northern Mexico went on strike on Friday.

U.S. light crude oil for May delivery dropped 61 cents to $63.65 a barrel after earlier peaking at $64.75 amid renewed concerns over Nigerian production.

Nigerian militants at the weekend said they had killed three soldiers in a remote area close to a major natural gas plant and threatened to carry out more attacks amid the campaign of violence against the OPEC member's oil industry.

However, news on Monday of the release of two Americans and a Briton held hostage for weeks by militants raised hopes for an end to three months of sabotage and kidnapping in the world's eighth largest oil exporting country.

DOLLAR WOES The dollar fell nearly 1 percent against the yen as Japanese investor purchases before the end of the business year this week triggered a wave of short covering.

The dollar was down 0.71 percent on the day to 116.60 yen, sliding from an intraday high of 118.49 on Friday.

The euro fell 0.76 percent to 140.25 yen but the single currency held firm against the dollar at $1.2034.

Last-minute buying by some big Japanese financial institutions also drove the yen up more than one percent against the battered Australian and New Zealand dollars.

''It just seems to be yen buying across the board at the moment, which is probably to some extent a reflection of money being brought back home ahead of the fiscal year-end,'' said Kamal Sharma, currency strategist at Bank of America.

Silver rose to its highest level in more than 22 years, rising as high as $10.82 an ounce but gold failed to sustain last week's gains and capitalise on a weaker dollar, easing under $560 an ounce.

REUTERS SD BD2045