European shares rise as oil rally pauses; all eyes on Fed

European shares staged a recovery on Wednesday after two sessions of declines as a rally in oil prices paused, lifting risk appetite ahead of the US Federal Reserve’s monetary policy decision.

The pan-European STOXX 600 was up 0.4% at 636.81 points by 0705 GMT.

Most major bourses rose, with Germany’s DAX up 0.4%.

Attention is on the Fed’s decision later in the day, with markets pricing in a 93% chance of a 25-basis-point interest rate hike, according to the CME’s FedWatch tool.

Rising inflation stemming from the Iran conflict have prompted markets to reassess their rate expectations. On Wednesday, oil prices took a breather, down 0.6%.

Stocks most hit by rising crude rebounded, with banks among the biggest gainers.

Barclays and Standard Chartered were up 1.4% and 1.7%, respectively.

These stocks had dragged the benchmark STOXX 600 to a three-month low on Tuesday. Among individual stocks, Babcock International retained its annual forecast.

Shares of the British defence and engineering group were up 2.5%.

Barratt Redrow trimmed its home completions target for fiscal 2027, citing planning delays and fewer sales outlet openings.

Still, its shares rose 5.1%.