Europe open: Stocks rise, but gains limited ahead of Fed decision

(Sharecast News) - European stocks rose for the third straight day on Wednesday, though gains were modest ahead of the much-anticipated Federal Reserve monetary policy decision. The pan-European Stoxx 600 index was up 0.2% early on at 434.38, as it continues to rebound after hitting a ten-month low last Friday.

Stocks put in decent gains on Tuesday after data showed that Eurozone inflation eased more than expected, raising hopes that the European Central Bank would start to cut interest rates sooner than anticipated next year.

However, most major indices across the continent on Wednesday were trading within a tight range of 0% to 0.2%, as investors refrained from taking on too much risk ahead of the potentially market-moving conclusion of the two-day Federal Open Market Committee meeting in Washington, with a decision due out after markets close at 1800 GMT.

The Fed is widely expected to keep interest rates unchanged for the second straight meeting, though it does find itself in a "challenging position", according to market expert Patrick Munnelly from Tickmill Group.

"While inflation has moderated throughout the year, the US economy continues to perform strongly, and the job market remains highly competitive. This situation creates uncertainty about whether inflation will return to the Fed's target of 2.0% and remain there without the need for additional policy adjustments," Munnelly said.

"Consequently, Fed Chair Powell is unlikely to rule out the possibility of future rate hikes or provide strong support for expectations of an imminent rate cut. Instead, he is expected to emphasise the ongoing uncertainty and avoid making definitive commitments about future policy actions."

Economic data will also be in focus on Wednesday, with the closely watched ADP Employment Report from the US due out at 1215 GMT, along with ISM US manufacturing figures.

Closer to home, the UK Nationwide housing price index unexpectedly rose by 0.9% in October after a revised 0.1% increase in September, surprising analysts who had expected a fall of 0.4%.

Meanwhile, the Caixin PMI showed that China's manufacturing sector unexpectedly contracted for the first time in three months in October, with the headline PMI falling to 49.5 from 50.6 the month before. The consensus forecast was for a pick-up to 50.8.

In company news, GSK rallied after the drug maker lifted its full-year profit outlook. It now expects turnover to increase by 12% to 13%, up from previous guidance of 8% to 10%, and adjusted operating profit growth of 13% to 15%, up from 11% to 13%.

In Paris, biopharmaceutical group Cellectis saw shares more than double in price after sector giant AstraZeneca announced it would acquire a 44% stake in the company to access its gene-editing technologies and manufacturing capabilities. The stock was up 114% at €1.93 in morning trade.

UK high street retailer Next rose strongly after boosting its full-year guidance as third-quarter trading beat internal expectations.