Europe close: Investors stay on the sidelines ahead of Fed

Investors maintained a very cautious stance going into the US central bank's policy decision on Wednesday.

"European stock market confidence has continued to suffer today, with the FTSE 100 and DAX both continuing their declines to further dent hopes of a Santa rally.

"US markets are starting their trading day in somewhat more positive fashion, although fears of the worst December for the Dow since the great depression still linger after recent losses," said IG's Chris Beauchamp.

By the end of trading, the benchmark Stoxx 600 was down by 0.82% or 2.80 points to 340.46, alongside a 0.29% or 31.31 point dip to 10,740.89 for the German Dax, while the FTSE Mibtel was off by 0.26% or 48.60 points to 18,644.85.

To take note of, after falling by approximately 12% year-to-date, the Dow Jones Industrials was standing roughly 1.0% above its 2018 lows at 23,400.

Similarly, front month Brent crude oil futures were fast approaching their 200-week moving average at $56.48 a barrel on the ICE.

From a sector standpoint, Oil&Gas led to the downside, with the corresponding Stoxx 600 sector gauge retreating by 2.47% or 7.69 points to 303.54.

Possibly also weighing on shares of Royal Dutch Shell, Bloomberg reported that it was in talks to acquire Endeavour Energy Resources for roughly $8bn.

Stock in Deutsche Telekom meanwhile was flat, despite its T-Mobile unit having successfully passed two national security reviews in the States for its merger with Sprint.

On the economic side of things, the German IFO institute's business confidence gauge for December fell to a reading of 101.0, following a print of 102.0 for the month before (consensus: 101.6).

It was dragged down by a decline in the expectations sub-index from 98.7 to 97.3.