Europe open: Stocks edge higher as investors digest FOMC minutes

European stocks edged higher in early trade, taking their lead from a positive session on Wall Street, after minutes from the latest Federal Reserve meeting highlighted caution over future interest rate hikes.

At 0850 BST, the benchmark Stoxx Europe 600 index was up 0.1%, Germanys’s DAX was up 0.4% and France’s CAC was 0.5% firmer.

At the same time, oil prices were higher after data on Wednesday from the Energy Information Administration showed as surprise draw in US inventories. They fell by 4.9m barrels last week, versus expectations for a 3.3m increase.

West Texas Intermediate was up 0.8% to $38.06 a barrel while Brent crude was 0.5% higher at $40.05.

“European markets have opened positively buoyed by overnight gains on Wall St aided by the latest oil price rally and dovish minutes from the March FOMC meeting indicating the Fed will be unlikely to raise interest rates before June as concerns remain around the growth prospects of the global economy,” said Andy McLevey, head of dealing at stockbroker Interactive Investor.

“With the oil price continuing to have an influence on global markets the volatility of late is set to continue as investors await speeches from both Mario Draghi and Janet Yellen which may give clues to future Central Bank policy.”

The Fed minutes released after the European close on Wednesday revealed that policymakers discussed the possibility of a rate hike in April but the overall consensus was that the risks from a global economic slowdown mean a cautious approach is needed.

“Several expressed the view that a cautious approach to raising rates would be prudent or noted their concern that raising the target range as soon as April would signal a sense of urgency they did not think appropriate,” according to the minutes.

Capital Economics said: “Although the minutes acknowledge that a few officials were ready to raise interest rates in April, many thought that the Fed should proceed more cautiously, in particular because of worries about global downside risks.

“At this stage, the chances of an April rate hike are very slim, but we expect the Fed will resume raising rates in June. By that time, fears surrounding global risks should have faded and further increases in core inflation will have convinced officials that the pick-up is in fact genuine. Thereafter, we expect the fed funds rate will end this year at between 1.00% and 1.25%.”

In corporate news, London-listed pharmaceutical company Shire was on the front foot after expressing confidence that its takeover of US-based Baxalta will proceed as planned even with new rules from the US Treasury to block ‘tax inversion’ deals.

Retailer Marks & Spencer was also in the black after it posted a mixed fourth quarter update that beat analysts’ expectations.

European Central Bank monetary policy meeting accounts are out at 1230 BST.