* August CPI index falls unexpectedly
* Fed begins two-day meeting
* Beverage makers up after Anheuser-Busch approaches SABMiller
* FedEx falls after missing expectations
* Dow up 0.05 pct, S&P up 0.03 pct, Nasdaq down 0.19 pct (Updates to open)
By Tanya Agrawal
Sept 16 (Reuters) - Wall Street was little changed on Wednesday as investors held fire ahead of the Federal Reserve's decision on an interest rate hike.
The Fed will announce its decision on Thursday after a two-day meeting.
Speculation about when the Fed will end seven years of near-zero interest rates has dogged Wall Street for months, with the picture complicated by recent market turbulence that some see as justification for the central bank to stand pat.
Fed fund futures <0#FF:> see only a 30 percent chance that Janet Yellen and her colleagues will pull the trigger this week but surveys of economists have been split 50-50 on a hike.
Any reaction that follows the meeting - whether the Fed moves or not - is likely to be short-lived as investors take stock of the long-term situation, said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.
"I don't think the Fed should wait until December to raise rates," he added. "You don't want to see that kind of volatility at the year-end."
At 9:49 a.m. ET (1349 GMT) the Dow Jones industrial average was up 7.68 points, or 0.05 percent, at 16,607.53, the S&P 500 was up 0.56 points, or 0.03 percent, at 1,978.65 and the Nasdaq Composite was down 9.47 points, or 0.19 percent, at 4,851.06.
Five of the 10 major S&P sectors were higher, with the energy index's 1.61 percent rise leading the advancers. Oil prices jumped about 3 percent after an unexpected drawdown in U.S. stockpiles. Exxon's 1.6 percent rise provided the biggest boost to the Dow and the S&P 500.
Stocks have been volatile since China devalued its currency in August. The S&P 500 has had moves of at least 1 percent in 12 of the past 18 sessions.
On Tuesday, the CBOE Volatility index - popularly known as the "fear index" - closed above 22 for the 17th consecutive day, the longest it has lingered above that level in nearly four years. The long-term average is 20.
"The volatility will continue until the Fed takes control of the policy and does what they've been thinking about or talking about for the better part of two years," said John Brady, managing director at R.J. O'Brien & Associates in Chicago.
Data on Wednesday showed that U.S. consumer prices unexpectedly fell in August as gasoline prices resumed their decline and a strong dollar curbed the cost of other goods.
The consumer price index slipped 0.1 percent last month. Economists polled by Reuters had forecast the CPI would be unchanged in August.
The Fed has said it will raise rates only when it sees a sustained recovery in the economy with special emphasis on the labor market and inflation. While the job market has continued to gain strength, inflation remains below the 2 percent target set by the central bank.
The Organization for Economic Cooperation and Development trimmed its growth outlook for the global economy but said the United States is doing well enough that its central bank should go ahead with a rate increase.
"Raising interest rates now would remove uncertainty in the markets," OECD chief economist Catherine Mann said, adding that what the Fed did afterwards would matter far more than the initial move.
Shares of Hewlett-Packard were up 3.8 percent at $28.09. The company said it would cut up to 33,300 jobs.
FedEx was down 2.7 percent at $149.77 after the package delivery company missed profit expectations.
U.S.-listed shares of Anheuser-Busch InBev were up 7.5 percent at $116.04 after the world's biggest beer maker approached rival SABMiller about a takeover.
Molson Coors jumped 13.2 percent, while Altria , which owns a 27 percent stake in SABMiller, was up about 2 percent.
Advancing issues outnumbered decliners on the NYSE by 1,746 to 870. On the Nasdaq, 1,261 issues rose and 1,040 fell.
The S&P 500 index showed one new 52-week high and no new lows, while the Nasdaq recorded 20 new highs and 10 new lows. (Reporting by Tanya Agrawal; Editing by Don Sebastian)