Renault supports European shares ahead of Fed rate outcome By Reuters

By Sruthi Shankar

(Reuters) – European shares edged higher on Wednesday Renault: (EPA:) on Japan’s potential merger talks Honda: (NYSE).

Europe-wide was up 0.1% at 0925 GMT, while stocks in Asia were also on wait-and-watch mode.

French carmaker Renault rose 6% to lead the STOXX 600 after a report of a possible tie-up between the top Japanese automakers.Renault owns 36% of Nissan.

The Fed is expected to cut interest rates by 25 basis points (bps) later on Wednesday, in what some observers are calling a “hawkish cut” to come alongside policymakers’ updated interest rate outlook and economic forecasts.

Meanwhile, U.S. Treasury yields rose to multi-week highs, weighing on global stocks recently as investors scaled back bets on the pace of Fed rate cuts next year.

“Recent macro data suggests that (US) economic activity remains resilient, that labor market easing is contained and that deflationary progress has stalled over the past few months,” analysts at Unicredit ( BIT: ) said.

“That likely means a slower pace of rate cuts (the new key word is ‘gradual’) ahead, which we expect will mean a 25bp cut per quarter in 1H, while data dependence remains.”

The UK exchange rate rose 0.4% on Wednesday as sterling came under pressure ahead of Thursday’s Bank of England (BoE) rate decision, where it is expected to keep rates on hold.

British inflation hit an eight-month high in November but service price growth, closely watched by the BoE as an underlying measure of inflationary pressures, held steady, offering some relief to the central bank.

Among other stocks, Commerzbank ( ETR: ) jumped 3.3% after Italian bank UniCredit said it raised its potential stake in the German lender to 28% by signing new derivatives contracts.

British fintech company Wise ( LON: ) advanced 4.2% to a more than three-year high.

Grenergy rose 19.2% after the Spanish renewable energy company agreed to sell a portfolio of assets in Chile to ContourGlobal, a KKR company, for an enterprise value of $962 million.