Europe open: Shares edge higher ahead of Fed rate decision

(Sharecast News) - European stocks opened higher on Wednesday ahead of a widely expected US rate cut, while inflation in the UK remained above the Bank of England's target, increasing the chances of no change to its benchmark on Thursday.

The pan-regional Stoxx 600 index was up 0.09% to 551 at 0816 BST with all major bourses higher.

Investors expect the US Federal Reserve to cut rates by 25 basis points later in the day amid a softening labour market and fears of the impact of President Donald Trump's tariffs on domestic prices.

"The Fed meeting later this evening is one of the most hotly anticipated for the year so far. The consequences of this meeting will be felt in two ways, the immediate decision and the longer-term consequences," said XTB research director Kathleen Brooks.

"We think that a 25bp cut is expected as the slowdown in the labour market justifies Fed action to support the economy to full employment. However, the market is likely to be more sensitive to what the Fed signals will happen in the future, and if they are embarking on a prolonged rate cutting cycle."

In the UK, official data showed inflation held steady at 3.8% in August, with the core rate, which strips out volatile energy and food costs, fell to 3.6% in July, in line with forecasts.

However, hard-pressed Britons are still paying higher prices for their food, meaning the BoE's base rate is likely to stay at 4% on Thursday - double its target of 2%.

On the equities front, shares in GSK rose as the pharma giant announced a $30bn investment in the US as President Donald Trump arrived in the UK for a state visit amid threats of large tariffs on the sector.

Reporting by Frank Prenesti for Sharecast.com