Europe open: Stocks edge higher as oil prices firm; Fed in focus

European stocks edged higher in early trade amid firming oil prices, as investors awaited the Federal Reserve’s latest policy announcement and further clues on the path of US interest rates.

At 0845 GMT, the benchmark Stoxx Europe 600 index was up 0.4%, France’s CAC 40 was up 0.6% and Germany’s DAX was 0.7% higher.

At the same time, oil prices recovered, supported by data from the US Energy Information Administration on Tuesday showing crude stockpiles rose 1.5m barrels last week, which was much less than expected.

Sentiment was also underpinned by news that a meeting of the Organization of the Petroleum Exporting Countries may take place in April, even without Iran.

West Texas Intermediate was up 1.1% at $36.75 a barrel and Brent crude was up 0.7% to $39.00.

“European equity markets have opened higher in early trade, as oil and metals bounce back slightly after yesterday's rout - but with the Federal Reserve decision and press conference this evening and the UK budget this afternoon, markets are likely to be relatively lacklustre until further clarity is provided,” said Rebecca O’Keeffe, head of investment at Interactive Investor.

With the Fed widely expected to stand pat on interest rates, investors will be paying close attention to what chairwoman Janet Yellen has to say.

“The gap in expectations between the Federal Reserve and the market on the pace of monetary tightening remains high, so investors will be hoping that Janet Yellen will reset the Fed's perspective closer to the market's more dovish view in order to narrow this difference,” said O’Keeffe.

“If not, markets could be in store for another nasty bout of volatility.”

In the UK, meanwhile, Chancellor George Osborne is set to announce £4bn in spending cuts during the Budget statement which kicks off at 1230 GMT.

The Federal Open Market Committee rate announcement is due after the European close at 1800 GMT.

In corporate news, shares in London Stock Exchange and Deutsche Boerse were both on the front foot after agreeing the terms of a merger.

Belgian chemical company Solvay rose after saying it will divest its stake in a joint venture with Ineos earlier than planned.

Brenntag racked up solid gains after the German chemical distribution firm posted better-than-expected 2015 profit.

On the downside, German industrial group Bilfinger slumped after saying it will not pay a dividend for 2015 and posting a wider loss.

Zodiac Aerospace was also under the cosh after it said profit this year was likely to be flat.

Still to come on the data front, US housing starts and CPI are at 1230 GMT, while US industrial production is at 1215 GMT.