By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets rebounded on
Wednesday, as investors waited to see if the U.S. Federal Reserve
will announce a reduction in its monthly asset purchases.
The Stoxx Europe 600 index gained 0.5% to 313.32, after closing
down 0.5% on Tuesday.
Banks helped lift the index, with Société Générale SA up 2.4% in
Paris, Standard Chartered PLC rising 1.8% in London and Banco
Santander SA (SAN) 1.6% higher in Madrid.
Shares of Nokia Oyj (NOK) rose 2.2% after Credit Suisse lifted
the Finnish firm to outperform from neutral.
Shares of Smiths Group PLC climbed 3.2% after the engineering
company declared a special dividend for the full year.
More broadly, investors in Europe waited for the U.S. Fed's
monetary policy announcement later in the day. Analysts expect the
central bank to announce a reduction of $10 billion to $15 billion
to its $85 billion-a-month bond-buying program at 2 p.m. Eastern
Time, followed by Fed Chairman Ben Bernanke commenting on the
decision at a news conference. Read: How stocks may react to the
Federal Reserve decision
Analysts at Daiwa Capital Markets said in a note, however, that
the decision is far from clear-cut, attaching a 40% probability of
no tapering.
"But with market expectations clearly slanted towards a first
move from the Fed, and with several FOMC members clearly itching to
get the process started, a move today on balance looks likely. Some
are also looking for any tapering to be accompanied by a downward
shift in the FOMC's unemployment threshold to 6% from the current
6.5%, in an attempt to convince market participants that the
[federal funds rate] will remain at its current level for longer,"
the analysts said.
U.S. stock futures pointed to a slightly higher open ahead of
the decision.
Back in Europe, the U.K.'s FTSE 100 index gained 0.1% to
6,578.13, while France's CAC 40 index put on 0.5% to 4,167.46.
Germany's DAX 30 index added 0.5% to 8,638.72.
HeidelbergCement AG climbed 2% after Goldman Sachs lifted the
German firm to buy from sell, saying it has the most attractive
long-term growth prospects versus its peers.
On a more downbeat note, shares of Hochtief AG gave up 1.3%
after Goldman Sachs cut the construction firm to neutral from
buy.
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