LONDON: European stock markets rose Wednesday as the EU reached a deal with Italy over Rome's disputed budget and implemented contingency plans for a no-deal Brexit.

Wall Street began the New York trading day with small gains, while Asian stocks were mixed, with all eyes on the US Federal Reserve's upcoming decision on interest rates.

The dollar slipped, while oil prices recovered somewhat a day after slumping to the lowest levels since late 2017 on concerns about a surplus of crude.

“Confirmation of a deal between Italy and EU instilled a modicum of Christmas cheer in the markets," noted Connor Campbell, analyst at Spreadex trading group.

The EU and Italy's populist government on Wednesday called a truce in their bitter row over Rome's disputed 2019 budget, as Brussels said revised spending plans fell within bloc rules.

In a first, the European Commission in October rejected Italy's original budget, which promised a universal basic income and a pension increase for low-wage earners.

Brussels judged it would not produce the promised growth and only increase Italy's already massive debt burden.

Meanwhile, the European Union adopted back-up plans to protect essential trade, transport and finance in the event that Britain leaves the bloc without a Brexit deal in just 100 days' time.

The European Commission said it was acting “to ensure that the necessary contingency measures can enter into application on 30 March 2019 in order to limit the most significant damage caused by a ‘no-deal' scenario".

The pound was down against the euro and flat versus the dollar, with pressure on sterling coming also from news of a drop in annual UK inflation.

On the corporate front, shares in GlaxoSmithKline surged after the UK pharmaceutical group said it and US peer Pfizer would merge their consumer healthcare units that produce over-the-counter medicines.

The tie-up of OTC brands including GSK's Sensodyne toothpaste with Pfizer's Centrum multi-vitamins paves the way for British group GSK to have two UK-listed companies, one specialised in the development of drugs and the other in consumer healthcare.

In Tokyo, Japanese technology giant SoftBank celebrated the world's second-biggest IPO for its mobile unit but the newly traded shares endured a torrid time in their debut session, plunging nearly 15 percent.

A spokesman for the firm confirmed it had raised around 2.65 trillion yen ($23.5 billion) via the unit's IPO, making it Japan's largest and the biggest globally since Chinese e-commerce giant Alibaba went public in 2014.

Later Wednesday, the US Federal Reserve is expected to raise its benchmark lending rate while signalling that it will hold off on future increases.

Copyright AFP (Agence France-Press), 2018