* Two-day Fed meeting starts on Tuesday
* World financial markets lower as Greece nears default
* UnitedHealth biggest boost to Dow; Microsoft to S&P, Nasdaq
* Coty jumps after buying three businesses from P&G
* Indexes up: Dow 0.6 pct, S&P 0.4 pct, Nasdaq 0.4 pct (Updates to early afternoon)
By Tanya Agrawal
June 16 (Reuters) - Wall Street was higher in afternoon trading on Tuesday as deal activity picked up in the consumer and healthcare sectors and investors waited for the outcome of a two-day Federal Reserve meeting.
The central bank is unlikely to raise rates in this meeting but investors will watch for any hints from Fed Chair Janet Yellen at a press conference after the meeting on Wednesday about the timing of a possible rate increase - the first in about a decade.
The Fed has said it remains data-dependent and will raise rates only when it sees an improvement in the economy. Second-quarter data points to a recovery after a halt in growth earlier in the year.
U.S. housing starts fell in May after a sharp increase the previous month, but a surge in permits for future construction to a near eight-year high suggested the pullback was temporary and pointed to underlying strength in housing.
“We continue to see some meaningful activity where M&A is concerned,” said Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management.
“A September hike has been priced in by the market but investors are more keen on seeing the pace of the hike.”
World markets were lower with European shares hitting a near four-month low as financial markets braced for the possibility of Greece defaulting on its debt.
Widely believed to be running out of money, Greece is one step closer to default and a possible exit from the euro zone after the latest talks collapsed on Sunday.
Athens has to repay $1.8 billion in loans to the International Monetary Fund at the end of June.
At 12:49 p.m. ET (1649 GMT) the Dow Jones industrial average was up 97.5 points, or 0.55 percent, at 17,888.67. The S&P 500 was up 8.88 points, or 0.43 percent, at 2,093.31 and the Nasdaq Composite was up 21.59 points, or 0.43 percent, at 5,051.56.
Nine of the 10 major S&P 500 sectors were higher, with the consumer staples index leading the advancers with a 0.95 percent increase.
UnitedHealth Group’s 1.9 percent rise boosted the Dow on a report that the company was considering buying Cigna and Aetna. Aetna was up 2.7 percent while Cigna fell 1.23 percent.
Microsoft, which was up 1.2 percent, was the biggest boost to the Nasdaq and the S&P 500.
Coty’s shares jumped 18.8 percent to $30.89 after the perfume maker won auctions to acquire hair-care, fragrance and cosmetics businesses from P&G for as much as $12 bln, according to sources. P&G was up 1.3 percent at $79.11.
Oshkosh fell 7.9 percent to $46.31 after the specialty truck maker cut its full-year profit forecast.
Advancing issues outnumbered decliners on the NYSE by 1,756 to 1,193. On the Nasdaq, 1,557 issues rose and 1,157 fell.
NYSE saw five new 52-week highs and 4 new lows; the Nasdaq Composite was recording 104 new highs and 31 new lows. (Reporting by Tanya Agrawal; Editing by Don Sebastian)