European shares extend recovery as investors focus on Fed update

European shares extended gains on Wednesday, as cautious traders awaited the outcome of the U.S. Federal Reserve’s two-day meeting later in the session for clues on monetary policy tightening in the face of surging inflation.

The pan-European STOXX 600 rose 1.1%, with all sectors in the black. Travel and mining stocks led gains.

The Fed will update its interest rate plan at 1900 GMT after its meeting, with markets priced for a first rate hike in March, and three more quarter-point increases by year-end.

Hygiene products group Essity dropped 3.4%, after posting a bigger-than-expected fall in quarterly profit and saying it planned to raise prices further in the face of record high costs.

Italian fashion group Tod’s jumped 10.1% after announcing that sales last year rose by almost 40%, the first increase after five years of consecutive declines, beating market expectations.

Swiss drug contract manufacturer Lonza gained 2%, after reporting a 20% jump in 2021 core earnings, shored up by demand for the substances it supplies for new mRNA COVID-19 vaccines. (Reporting by Anisha Sircar in Bengaluru; Editing by Rashmi Aich)