Europe open: Stocks edge higher as oil recovers; earnings in focus

European stocks edged higher in early trade as oil prices recovered and investors sifted through a raft of corporate news at the start of the Fed’s two-day policy meeting.

At 0845 BST, the benchmark Stoxx Europe 600 index was up 0.5%, Germany’s DAX was 0.7% higher and France’s CAC 40 was up 0.5%.

At the same time, oil prices were a touch firmer, underpinned by a weaker US dollar. West Texas Intermediate was up 0.5% at $42.83 a barrel and Brent crude was 0.3% higher at $44.62.

“After weaker markets over the past few days, there are early signs that lower prices are starting to tempt traders back into the market. Furthermore with the closely watched FOMC meeting taking place tomorrow many traders are at least temporarily moving their overall exposure to more neutral from previous negative, consequently closing some of their short-positions. Whilst there is very little data in Europe this morning there is plenty in the US later today,” said Markus Huber, a trader at City of London Markets.

“The main focus will be on US durable goods orders and US consumer confidence. Whilst today's economic data will not necessarily sway the Fed to change their outlook on interest rates tomorrow, overall it is expected that their tone will be somewhat less dovish as the outlook for the global economy starts improving.”

In corporate news, BP was a high riser after the oil giant’s underlying first-quarter earnings beat analysts’ expectations.

Safran was also in the black after the French aerospace supplier reported a 7.8% increase in first-quarter revenue.

Bayer edged up after the German drug maker said underlying core earnings rose nearly 16% in the first quarter, while French telecoms group Orange advanced after saying revenue grew 3.5% in the first quarter.

Nokia was higher after agreeing to buy digital health firm Withings for €150m.

British American Tobacco pushed up as it posted a jump in first-quarter revenue but cautioned that currency impacts could hit full-year profit.

On the downside, Air Liquide was weaker as it posted a drop in first-quarter sales but reaffirmed its profit target for the year, while Salzgitter fell after it reported a decline in first-quarter earnings and revenue.

FTSE 250 aerospace and defence group Cobham tanked after proposing a £500m rights issue in the second quarter of the year as it reported a slump in first-quarter trading profit.

Aside from earnings, investors will be keeping an eye on the Federal Reserve, which is due to make a rate announcement on Wednesday. Although the central bank is widely expected to stand pat on interest rates, investors will be eyeing the accompanying statement for any clues over the future policy path.

Meanwhile, the Bank of Japan is due to announce its latest policy measures on Thursday.

US durable goods orders are at 1330 BST, S&P/Case-Shiller house prices are at 1400 BST, the Markit Services PMI is at 1445 BST and consumer confidence is at 1500 BST.