London: European stock markets steadied Wednesday, while oil prices retreated after a recent surge, as traders awaited the conclusion of a key Federal Reserve policy meeting.
Asian stocks had earlier closed with solid increases, helped by strong gains to share prices of energy companies after a rally for oil prices that petered out Wednesday.
The dollar was up against the euro and pound, but down versus the yen.
European "equity markets are subdued as traders await the Federal Reserve meeting later this evening", noted David Madden, market analyst at CMC Markets UK.
"The US central bank is widely expected to hike interest rates, but the statement is probably going to be the most important component of the update.
"There is growing chatter that the Fed will hike rates in December, and dealers will be listening out for clues about a possible rate rise at the back end of the year," Madden added.
While worries about the China-US trade row continue to erode confidence, the strong US economy and healthy corporate outlook are providing some buoyancy for now.
But another concern for the global economy are high oil prices that help to fuel inflation and eventually interest-rate hikes.
The weekend decision by major producers from inside and outside OPEC to maintain crude output -- despite US President Donald Trump's call for lower prices -- has sent both main contracts sharply higher this week.
Brent North Sea oil continues to sit around four-year highs, with a stronger dollar and expected output cut from Iran adding some lift.
"Oil prices remain in the bulls' domain amid concern that US sanctions on Iranian crude oil exports will result in much tighter physical market conditions once they take effect in November," said Stephen Innes, head of Asia-Pacific trading at OANDA.
Meanwhile on Wednesday, with the Fed widely expected to raise interest rates, governor Jerome Powell's post-meeting statement will be closely watched for clues about its next move, with an eye on the increasingly bitter China-US trade dispute.
"The US domestic economy is trotting along nicely; the rest of the world is not in the same place and there's no doubt that global investor caution is continuing to increase as the trade war between the US and China appears to be heating up," noted Nick Twidale, chief operating officer at Rakuten Securities Australia.
"Analysts will be watching closely to see if the Fed acknowledges this and its potential impact on the US."
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