SYDNEY, AAP – A broad-based rally has helped Australian shares higher as investors wait for a US Federal Reserve decision tomorrow which is widely tipped to raise rates.

The ASX rose 1.1 per cent and most world markets were higher after Brent crude oil prices dropped below $US100 per tonne.

The benchmark S&P/ASX200 index closed up 77.8 points, or 1.1 per cent, to 7175.2 points.

The index is down about 500 points from its record high in August last year.

The All Ordinaries index closed higher by 79.7 points, or 1.08 per cent, to 7435.8 points.

Meanwhile the US central bank is tipped to raise rates by a quarter of a per cent to slow inflation.

The Australian dollar was buying 72.09 US cents at 1623 AEDT, higher from 71.82 US cents at Tuesday’s close.