European shares up, caution reigns ahead of Fed
Shares were mixed and the dollar rose on Wednesday as markets awaited the outcome of the U.S. Federal Reserve's policy meeting, seen leaving interest rates on hold but the door open for further increases later in the year.
Investors have welcomed the easing of the intense volatility that swept through financial markets in the first two months of the year, but are aware that calmer conditions mean the Fed might be more inclined to resume its policy tightening soon.
That supported the dollar, which gained most ground against the yen after Bank of Japan governor Haruhiko Kuroda said the central bank had room to slash interest rates to around -0.5 percent from -0.1 percent at present.
European shares bucked the trend in Asia, rising in early trade thanks to a recovery in oil prices following two days of losses that had culminated in a decline of around 5 percent.
In Britain, investors were eyeing a budget presentation during which finance minister George Osborne is expected to cut public spending and warn that the domestic economy will not escape the global economic turbulence unscathed.
"Given that stocks have been trading near multi-week highs, more prudent players in the markets pared back some of their recent exposure ahead of the conclusion to today's Federal Reserve rate meeting," said Michael Hewson, chief markets strategist at CMC Markets.
"Having said that, today's oil rebound has led to a slightly higher open this morning in Europe."
In early European trade, the FTSEuroFirst 300 index of leading shares was up 0.4 percent at 1,346 points .FTEU3. Germany's DAX was 0.7 percent higher, France's CAC 40 up 0.5 percent .FCHI and Britain's FTSE 100 gained 0.4 percent .FTSE.
Oil prices managed a bounce after data from industry group the American Petroleum Institute (API) showed U.S. crude stockpiles rose by less than half what analysts had expected.
U.S. crude CLc1 gained 1.7 percent to $36.96 a barrel, while Brent LCOc1 rose 1.3 percent to $39.27, lifting resources stocks. Shares in BP (BP.L) were up 2 percent.
In Asian trading, MSCI's broadest index of Asia- Pacific shares outside Japan .MIAPJ0000PUS edged down 0.1 percent, and Japan's Nikkei .N225 took a knock from an initial rise in the yen and fell 0.8 percent. MSCI's global share index was last down 0.1 percent, while U.S. futures pointed to a slender rise of 0.1 percent at the open on Wall Street ESc1.