Europe open: Investors catch their breath ahead of slew of central bank decisions

Stocks on the Continent were taking a breather early on Wednesday morning following the very sharp gains seen during the previous session, with investors also wary ahead of the US central bank's policy announcement due out after the market close in Frankfurt.

Summing up the situation facing traders, Neil Wilson, chief market analyst at Markets.com told clients: "You got to know when to hold ‘em, know when to fold ‘em. We don’t know if Powell is a gambler but will need to be pretty good at poker to navigate this situation; assailed by his president to cut and by market pricing that is almost forcing his hand."

The US Federal Open Market Committee was scheduled to release it policy statement at 1900 BST, followed by a press conference with chairman Jerome Powell at 2030 BST.

To take note of as well, central bank decisions were also scheduled on Thursday in the UK, Japan, Taiwan, Philippines and Indonesia

In recent weeks, Fed funds futures had moved to fully price in two 25 basis point interest rate cuts by policymakers in the US before the end of the year and even odds of a third cut.

But while rate-setters in Washington D.C. were expected to reveal a more dovish bias, some analysts believed that they would shy away from fully endorsing market pricing, especially given the uncertain end game in the US-China trade war.

As of 0837 BST, the benchmark Stoxx 600 was flat at 384.45 and the Dax unchanged at 12,330.40, while the FTSE Mibtel was adding just 0.02% to 21,138.90.

It was similar story in other asset classes, with the yield on the benchmark 10-year Italian Treasury note edging up by one basis point to 2.12%, following a powerful rally during the previous session and euro/dollar adding 0.03% to 1.11985.

On Wednesday, European Central Bank President Mario Draghi opened the door to further rate cuts, should the economic outlook not improve, triggering a wave of buying in bonds and stocks.

Front month Brent crude oil futures meanwhile were adding 0.433% to $62.41 a barrel on the ICE.

In economic news, according to the Federal Office of Statistics, producer prices in Germany dipped by 0.1% month-on-month in May, pushing the year-on-year rate of change down from 2.5% for April to 1.9% (consensus: 2.1%).

For later in the session, construction output figures from Eurostat were due out at 1000 BST.