Europe open: Stocks mostly lower ahead of Fed rate announcement

European stocks were mostly lower in early trade on Wednesday as investors geared up for a Federal Reserve policy announcement and eyed Sino-US trade deal progress.

At 0900 GMT, the Stoxx 600 was down by 0.1% at 398.00, as Germany's Dax fell by 0.2% to 12,911.62 and the French CAC 40 rose by 0.1% to 5,743.25. Meanwhile, London's FTSE 100 was 0.2% lower at 7,294.47.

The US Federal Reserve is expected to announce a 0.25% cut to interest rates when it makes its policy announcement at 1800 GMT.

CMC Markets analyst David Madden said: "The US unemployment rate is at a fifty year low, plus average earnings are comfortably outstripping inflation, so workers are getting an increase in real wages, so it seems strange the US central bank are potentially going to cut rates again.

"In recent months, the Fed have talked about adjusting their policy in accordance with the data. Manufacturing as well as services have slowed down but three rate cuts in four months seems excessive. Regardless of the rate decision, the press conference will be closely watched."

Meanwhile, optimism over a trade deal between the United States and China faltered as an American official cited by Reuters said a phase one agreement might not be completed in time for signing in Chile next month, as had previously been expected.

In the UK, a pre-Christmas general election was on the cards after Labour leader Jeremy Corbyn threw his weight behind the idea, with Prime Minister Boris Johnson's bill for a 12 December vote now just requiring approval from the House of Lords.

CMC Markets analyst Michael Hewson said: "While expectations are high that we could see the Conservatives win a majority, as we know from 2017 the eventual outcome is likely to be unpredictable.

"Party loyalties no longer matter as much as to whether you voted leave or remain, and the prospect of another hung parliament, or a Labour government is still a significant risk in what is a highly volatile political climate."

Among individual stocks, Fiat Chrysler and PSA Renault Citroen were both higher after confirming they are in talks over a possible merger.

L'Oreal was also in the green after the French cosmetics maker beat third-quarter revenue forecasts following strong demand in China, India and Japan.

German lubricant maker Fuchs Petrolub was the top riser on the Stoxx 600 after it managed to slow its decline in third-quarter profit thanks to cost control measures.

Deutsche Bank was among the top fallers after it fell short of expectations as it reported a net loss of €832m for the three months ended 30 September as it ploughs ahead with a vast restructuring programme.

Swiss lender Credit Suisse dropped despite beating third-quarter net income expectations as it warned that it expected headwinds from the "challenging geopolitical environment" to persist into the final quarter of the year.