Europe midday: Shares hold gains with eyes on Fed meeting next week

(Sharecast News) - European shares were in upbeat mood on Friday as investors looked ahead to next week's Federal Reserve meeting with bets increasing on a 25 basis point cut in interest rates.

The pan-regional Stoxx 600 index was up by 0.34% in early to 580.88 with all major bourses higher.

Policy makers on the Federal Reserve's Federal Open Market Committee meet on December 9-10 with markets now pricing in an 87.1% chance of a cut.

Eyes will also be on delayed September US consumer spending data, the University of Michigan's December consumer survey and the personal consumption expenditures index - a key measure for the Fed's on price movements.

"Ultimately, while the PCE data will help us to gain a more complete picture of the US inflation landscape, this data is very backward looking so as long as it is roughly inline with expectations of a 2.8% then the rally could continue," said XTB research director Kathleen Brooks.

"If the PCE can remain below 3%, this would suggest that US price growth is stable, even if it is above the Fed's target rate of 2%. The last two weeks of the year are typically strong for equities, and there could be a fear of missing out on some extra gains before year end. Thus, FOMO could help drive stocks into year end and may help the market to overcome its fears of stretched valuations, particularly in the tech sector."

In equity news, Ocado shares jumped after US supermarket chain Kroger agreed to pay $350m in compensation for the closure of three automated warehouses designed by the UK online grocer.

Ocado earlier this month said Kroger's decision to fulfil online orders from its own stores in highly populated areas would cost it $50m in lost licensing fees.

Reporting by Frank Prenesti for Sharecast.com