* Exxon, Chevron up on crude oil price rise
* Kennametal, 3M slump after forecast cuts
* Valeant up on distribution deal with Walgreens
* Indexes up: Dow 0.93 pct, S&P 1.07 pct, Nasdaq 0.90 pct (Updates to open)
By Abhiram Nandakumar
Dec 15 (Reuters) - U.S. stock indexes were sharply higher in early morning trading on Tuesday as crude oil prices recovered from near 11-year lows and ahead of a widely expected increase in interest rates later in the week.
The U.S. Federal Reserve begins a two-day policy meeting later in the day to decide on rates, with a statement scheduled for Wednesday.
Traders see an 83 percent chance of a liftoff this week, according to the CME Group's FedWatch program, but investors are concerned about the pace of future rate hikes.
A free fall in prices of oil and other commodities has also rattled the junk bond market over the past week, with some high-profile funds forced to halt redemptions as yield spreads ballooned.
"It's been hard to predict where the market is going on a day-to-day basis," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
Brown said he expects trading to be slightly volatile as traders set up positions ahead of the Fed's statement, adding that an increase in rates was largely priced in.
"It will really be a shock to the market if (the Fed) didn't move," he said.
At 9:35 a.m. ET the Dow Jones industrial average was up 161.95 points, or 0.93 percent, at 17,530.45, the S&P 500 was up 21.54 points, or 1.07 percent, at 2,043.48 and the Nasdaq Composite index was up 44.74 points, or 0.9 percent, at 4,996.97.
All 10 major S&P sectors were higher, with the energy sector's 1.53 percent rise leading the advancers.
Global stocks rose on Tuesday as crude oil prices recovered from near 11-year lows.
Exxon was up 2.4 percent and was the biggest boost to the S&P 500, while Chevron rose 2 percent.
U.S. economic data showed overall consumer price index was unchanged in November after rising 0.2 percent in October, as lower gasoline prices offset higher rents, airline fares and medical costs.
Amgen shares were up 2.7 percent at $162.40. The drugmaker said on Monday that it would repurchase sales rights to three of its products from GlaxoSmithkline.
Valeant Pharmaceuticals was up 14 percent at $107.02 after the Canadian drugmaker entered into a distribution deal with Walgreens. Walgreens was up 1.7 percent.
Kennametal slumped 15.3 percent to $21.67 after it cut its 2016 profit and revenue forecasts, citing weakness and volatility in its core markets and lower oil prices.
3M was down 3.8 percent at $151.65 after cutting its 2015 profit outlook.
Advancing issues outnumbered decliners on the NYSE by 2,415 to 350. On the Nasdaq, 1,801 issues rose and 452 fell.
The S&P 500 index showed six new 52-week highs and one new lows, while the Nasdaq recorded 11 new highs and 40 new lows. (Reporting by Abhiram Nandakumar and Aastha Agnihotri in Bengaluru; Editing by Anil D'Silva)