The Federal Reserve is expected to cut interest rates again Wednesday, with markets closely examining what Fed chief Jerome Powell has to say on the outlook (KAREN BLEIER)

London (AFP) – European stock markets closed narrowly mixed Wednesday while Wall Street marked time ahead of an expected US interest rate cut.

News that auto giants Fiat Chrysler and Peugeot-maker Groupe PSA were in talks on a possible $50-billion (45-billion-euro) mega merger sparked local interest, with both shares making sharp gains.

The British pound firmed in early trade but then slipped back after UK lawmakers voted to hold a general election in December as Prime Minister Boris Johnson seeks to break the Brexit deadlock.

– All eyes on Fed –

Wall Street was easier as investors awaited a Federal Reserve decision on interest rates.

The Fed is widely expected to cut interest rates again but markets are keen to hear whether the US central bank will signal additional rate cuts or a pause.

The decision comes as fresh data showed US economic growth cooled slightly in the third quarter, while private sector companies hired more people in October than analysts expected.

General Electric shot up about 10 percent after reporting better-than-expected third-quarter profits and boosting some of its financial targets despite reporting another large loss.

Apple and Facebook results are due after the close. 

XTB analyst David Cheetham said the key focus was on “the Fed decision this evening where investors are expecting a hawkish cut, with US rate setters widely expected to lower the base rate for the third meeting in a row.”

In Paris, PSA rallied 5.4 percent while in Milan Fiat Chrysler Automobiles (FCA) surged 10 percent.

A merger would bring PSA access to the lucrative US market, while helping it survive the twin impact of the global economic slowdown and trade war worries, analysts said.

“One bright spot was the car sector,” noted City Index analyst Fiona Cincotta.

“Like most of the car sector both Fiat and Peugeot have been struggling with slowing global car demand and the fallout of various trade frictions.”

The tie-up would make the new automaker the fourth largest in terms of sales behind Volkswagen, Renault-Nissan-Mitsubishi and Toyota, and would combine a host of well-known brands from Alfa Romeo, Jeep and Dodge to Citroen, Opel and Peugeot.

Asian stocks slipped Wednesday as traders waited for the Fed decision, confident of another rate cut but focused on its plans for the future.

“With market expectations signalling a 93-percent chance of a rate cut today, we are instead seeing a focus on the outlook, with markets expecting to wait until April 2020 to see the next 25 basis-point move,” IG analyst Chris Beauchamp said.

 – Key figures around 1700 GMT – 

London – FTSE 100: UP 0.34 percent at 7,330.78 points (close)

Frankfurt – DAX 30: DOWN 0.23 percent at 12,910.23 (close) 

Paris – CAC 40: UP 0.45 percent at 5,765.87 (close)

EURO STOXX 50: FLAT at 3,620.29

New York – Dow: FLAT at 27,098.56

Tokyo – Nikkei 225: DOWN 0.6 percent at 22,843.12 (close)

Hong Kong – Hang Seng: DOWN 0.4 percent at 26,667.71 (close)

Shanghai – Composite: DOWN 0.5 percent at 2939,32 (close)

Pound/dollar: UP at $1.2874 from $1.2862 at 2100 GMT

Euro/pound: UP at 86.41 pence from 86.40 pence 

Euro/dollar: UP at $1.1123 from $1.1112

Dollar/yen: DOWN at 108.87 yen from 108.89 yen

Brent North Sea crude: DOWN 1.29 percent at $60.44 per barrel

West Texas Intermediate: DOWN 1.85 percent at $54.53

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Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.