By Katanga Johnson and Herbert Lash

WASHINGTON/NEW YORK (Reuters) -Global equity markets rose on Monday as investors await clarity from the U.S. Federal Reserve as to whether it will might raise interest rates sooner than they anticipated several months ago, before a sustained bout of inflation.

Wall Street advanced to record highs as gains for energy shares and Tesla were countered by declines in the tech sector only to stumble slightly lower, closing the session mixed. European stocks also hit record highs following upbeat earnings reports and a surge in banking shares.

The pan-European STOXX 600 index rose 0.71% and MSCI's gauge of stocks across the globe gained 0.44% as the multi-national mood was supported by Japan's post-election boost and stabilizing coal prices in China.

Harley-Davidson Inc shares jumped after the European Union removed retaliatory tariffs on U.S. products, including whiskey, power boats and company's motorcycles.

The euro zone bank sector touched its highest level in more than two years and was the day's best performer as bond yields surged on expectations the European Central Bank will hike rates next year. [GVD/EUR]

The Dow Jones Industrial Average rose 94.28 points, or 0.26%, to 35,913.84 after eclipsing 36,000 points for the first time ever during intraday trading. The S&P 500 gained 8.29 points, or 0.18%, to 4,613.67 while the Nasdaq Composite added 97.53 points, or 0.63%, to 15,595.92.

Japan's Nikkei rose 2.61% in early trades after Prime Minister Fumio Kishida's Liberal Democratic Party won an unexpected comfortable victory, raising hopes for political stability and stimulus in the term ahead.

The dollar drifted lower after posting its biggest daily rise in more than four months last Friday as hedge funds pared bearish bets before the Federal Reserve's policy meeting this week.

The Federal Reserve on Wednesday is expected to approve plans to scale back its $120 billion monthly bond-buying program put in place to support the economy, while investors will also be focused on commentary about interest rates and how sustained the recent surge in inflation is.

"This (meeting) is going to be a relatively big deal," said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. "We are expecting to hear the glide path for tapering the bond purchases.

"The market has to be on guard for a more aggressive, hawkish view from the Fed," said Marc Chandler, chief market strategist at Bannockburn Global Forex.

Fed Chair Jerome Powell has said tapering would be over by mid-year 2022, which has been pegged as June, but that could also mean May, Chandler said.