By Bansari Mayur Kamdar
European shares rose on Wednesday ahead of the U.S. Federal Reserve's policy decision, with British stocks outpacing regional peers as investors reeled in Bank of England rate hike bets on cooling UK inflation data.
The pan-European STOXX 600 index gained 0.4% after two consecutive sessions of losses, as healthcare shares climbed nearly 1% by 0809 GMT.
Commerzbank added 1.2% after the German lender's finance chief said on Tuesday it expects to earn net interest income of 8 billion euros ($8.5 billion) this year, as it benefits from higher interest rates.
Investor focus will be on the Fed's policy decision due at 1800 GMT, where the U.S. central bank is expected to stand pat on interest rates.
UK's export-oriented FTSE 100 gained 0.6% as the pound slid after British annual consumer price inflation (CPI) unexpectedly fell in August, pushing investors to scale back bets on BoE rate hikes a day before its policy announcement.
"Despite the progress on disinflation, however, this latest CPI data is probably not enough to call an end to policy tightening at tomorrow's Bank Rate announcement," said Nick Rees, FX market analyst at Monex Europe.
"MPC members will want to be sure this is not just a one off fluke, and based on previous communications by BoE speakers, would like to be convinced of a sustained slowdown in wage growth before calling an end to policy tightening."
Rate-sensitive London-listed homebuilders jumped 3.6%.
In Germany, producer prices posted their biggest year-on-year decline in August since data collection began in 1949, spurring hopes for further easing of inflation in Europe's largest economy.
Shares of Just Eat Takeaway jumped 6.4% after a federal judge said on Tuesday the company's U.S. unit Grubhub and other food delivery groups can sue New York City over a law capping how much it can charge restaurants for delivering meals.
Pearson fell 4.9% after the British education group said it has appointed Microsoft executive Omar Abbosh as its new CEO, effective early 2024.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Sherry Jacob-Phillips and Varun H K)
