European stocks rebounded on Wednesday as an oil-price rally paused and Treasury yields eased back below 5%, ahead of the Federal Reserve's rate decision. Banks were among the biggest gainers in the recovery from Tuesday's three-month low, with markets pricing in a 25-basis-point hike later in the day.
Indices bounce back across the region
European shares rebounded on Wednesday after two straight sessions of declines, as a pause in the oil rally lifted risk appetite ahead of the Federal Reserve's policy decision. The pan-European STOXX 600 gained 0.4% to 636.81 points by 0705 GMT. Germany's DAX also added 0.4%.
The recovery broadened across the region. The Eurostoxx rose 0.5%. France's CAC 40 added 0.3%. Britain's FTSE gained 0.4%, while Spain's IBEX and Italy's FTSE MIB each climbed 0.6%.
Banks recover as oil eases
Oil prices took a breather on Wednesday, slipping 0.6%. Brent crude also fell back under $108 a barrel. Stocks hit hardest by the recent surge in crude rebounded, with banks among the biggest gainers as Barclays rose 1.4% and Standard Chartered climbed 1.7%.
These same stocks had dragged the STOXX 600 to a three-month low on Tuesday. Ten-year Treasury yields also moved back to just below 5% after briefly breaching that threshold a day earlier, easing some of the pressure on equity valuations.
Markets brace for a Fed rate hike
Attention has turned to 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 has prompted markets to reassess their rate expectations, and price pressures remain elevated heading into the announcement.
US futures also pointed modestly higher, with S&P 500 futures up 0.3% and Nasdaq futures gaining 0.5% ahead of the open.
Individual movers
Among individual stocks, Babcock International retained its annual forecast, and shares of the British defence and engineering group rose 2.5%. Barratt Redrow trimmed its home completions target for fiscal 2027, citing planning delays and fewer sales outlet openings, yet its shares still rose 5.1%.
Sources: Investing.com, investingLive
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