Europe midday: Stocks edge higher with central banks in focus

European markets were still edging ahead come midday following losses during the previous session as Australia raised interest rates for the first time in more than a decade and investors bid their time ahead of key monetary policy decisions around the world scheduled for later in the week.

The pan-European Stoxx 600 index was holding 0.17% higher at 444.57 as momentum from a Wall Street rally overnight boosted sentiment.

The US Federal Reserve was expected to announce a half-percentage point increase to its benchmark interest rate on Wednesday and traders had already factored in half point moves for the subsequent three policy meetings.

Banks are taking more aggressive stances to combat soaring inflation.

Australia on Tuesday hiked its interest rate for the first time in more than a decade as consumer prices surge.

"The decision by the Reserve Bank of Australia to lift its key interest rate a notch more than expected highlights the growing consensus among central banks that much tougher action is needed to rein in soaring inflation which is causing such a headache for economies," said Hargreaves Lansdown analyst Susannah Streeter.

"With wage growth also picking up steam along with consumer prices, the signs and signals are coming thick and fast that more hikes should be expected."

In equity news, shares in UK energy giant BP rose as the company reported better-than-expected underlying first-quarter profits despite booking a $23bn writedown on its exit from Russia after Moscow’s unprovoked invasion of Ukraine.

Portuguese energy company Galp slid 3.1% after its results.