- Fed policy decision looms
- BoE meeting minutes released
- Militants attack Iraq oil refinery
FTSE 100: 0.41%
CAC 40: 0.06%
FTSE MIB: 0.17%
IBEX 35: 0.36%
Stoxx 600: 0.09%
European stocks rallied as investors awaited the Federal Reserve's latest policy decision.
The Fed is expected to announce a further tapering of quantitative easing when it wraps up its policy meeting later this evening. Analysts predict the central bank will cut another $10bn off its monthly bond purchase programme to take the total to $35bn.
However, following Tuesday's release of the latest US inflation data, which showed prices rose more than forecast, some analysts now believe the Fed may consider raising interest rates sooner than it had been expecting. US consumer prices rose by 0.4% month-on-month and 2.1% year-on-year in May, surpassing analysts' estimates.
"Yesterday's US CPI numbers has invited some concern that, even here, tightening might come sooner rather than later, which would be more plausible given that CPI inflation is over 2%, and unemployment is continuing to fall," according to Michael Hewson at CMC Markets.
BoE votes unanimously to hold interest rates
Bank of England policymakers voted unanimously to hold interest rates this month, but expressed surprise that markets had underestimated the chance of a hike later this year.
Members of the Bank's Monetary Policy Committee all voted to keep base rates at 0.5% and to leave quantitative easing unchanged at £375bn, minutes of the meeting on June 4th-5th showed.
In his Mansion House speech last week, BoE Governor Mark Carney suggested that an increase in interest rates was a possibility as soon this year given the pick-up in the economy.
"Minutes from the Bank of England struck an odd tone, neither entirely backing up Mark Carney nor completely distancing themselves from his Mansion House speech," IG analyst Chris Beauchamp noted.
"The bank might think the market has become too relaxed about a rate hike in 2014, but on the back of today's minutes most policymakers are still worried that growth is too weak. To raise rates only to cut them again would be the height of folly, even without considering the deleterious impact on the bank's reputation."
Islamist-led militants have attacked Iraq's biggest oil refinery in Baghdad with machine guns and mortars, according to reports today.
The Baghdad government is fighting against the Islamic State in Iraq and the Levant (ISIS) and its Sunni Arab allies in Diyala and Salahuddin provinces, after they took over the second city, Mosul, last week.
Brent crude futures slipped $0.115 to $113.320 per barrel following an early morning rally, according to the ICE, amid concerns that the turmoil in Iraq will disrupt oil supplies.
Boliden surged after Nordea upgraded the shares
to 'buy' from 'sell' citing earnings growth from the second quarter.
Ryanair advanced after marketing and sales chief Peter Bellew said Spain should consider selling 100% of airports operator Aena Aeropuertos, with Ryanair helping Aena cut costs and increase tourist traffic.
Rheinmetall jumped on reports the German defence company will sign a €2.7bn tank deal with Algeria.
Vodafone gained after the Financial Times reported that the carrier and 02 are in talks to offer Amazon.com's new smartphone to customers.
The euro rose 0.16% to $1.3568.