* Fed announcement expected at 2 p.m. ET (1900 GMT)
* Yellen speaks half an hour later
* Traders see a more than 80 pct chance of hike on Wednesday
* Disney rises as newest installment of "Star Wars" hit screens
* Futures up: Dow 103 pts, S&P 11 pts, Nasdaq 24.75 pts (Changes comment, updates prices)
By Tanya Agrawal
Dec 16 (Reuters) - Wall Street looked set to open higher on Wednesday ahead of a widely expected hike in interest rates by the Federal Reserve later in the day.
The Fed will announce the outcome of its policy meeting at 2 p.m. ET (1900 GMT), followed by a press conference by Chair Janet Yellen at 2:30 p.m. ET.
An increase in the Fed's benchmark rate, from near zero, would be the first since June 29, 2006.
After more than a year of posturing and a couple of false starts, the U.S. central bank is seen raising rates by a token 25 basis points.
Traders see an 81.4 percent chance of a rate hike, according to the CME Group's FedWatch tool.
The Fed is expected to move gradually on subsequent rate hikes after the initial liftoff, according to a Reuters poll. That will help soothe jittery markets, which have been roiled recently by a rout in crude oil prices and a fall in the Chinese yuan.
"I think the ideal outcome today is that the Fed raises rates and they give us a lot of verbiage that says we're going to go slow," said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis.
"Yellen is a dove and she is going to remain a dove. She has to follow through and hammer home that they're not going to be in a hurry and that's what the market wants."
Dow e-minis were up 103 points, or 0.59 percent, with 29,609 contracts changing hands at 8:25 a.m. ET. S&P 500 e-minis were up 11 points, or 0.54 percent, with 211,637 contracts traded. Nasdaq 100 e-minis were up 24.75 points, or 0.54 percent, on volume of 29,858 contracts.
Higher interest rates make loans more expensive, crimping profit margins. Banks, however, will benefit.
The rate hike will be a highly symbolic move, coming exactly seven years to the day, since the Fed cut rates to zero as the financial crisis engulfed the world.
Since then, the U.S. stock market has staged a spectacular bull-run, with the S&P 500 index more than doubling and the Nasdaq composite index briefly breaching its dotcom boom highs.
The Fed has said it would raise rates when it saw a sustained recovery in the economy. While the unemployment rate has fallen to multi-year lows, inflation remains stuck below the Fed's 2 percent target.
"We expect the start of policy normalization to serve as a catalyst for normalization of the investment environment," said Mike O'Rourke, chief market strategist at Jones Trading.
The prolonged period of extremely accommodative monetary policy has distorted investment objectives, he said in a note.
Data on Wednesday showed U.S. housing starts in November rose 10.5 percent to a five-month high, highlighting strength in the housing market's recovery.
Shares of Dow component Disney were up 2.2 percent at $114.65 in premarket trading as the newest installment of "Star Wars" hit screens worldwide.
Payment processor Heartland Payment was up 10.5 percent at $94.06 after agreeing to be bought by Global Payments for $4.3 billion. Global Payments was down 6.9 percent at $66.50.
Reporting by Tanya Agrawal and Abhiram Nandakumar; Editing by Anil D'Silva