London (AFP) - Global stock markets wavered on Wednesday as investors braced for an expected half-point interest rate hike from the inflation-fighting US Federal Reserve.
Oil prices rebounded sharply after the European Commission proposed a gradual ban on Russian crude over Moscow's invasion of Ukraine.
European stocks closed down, after a broadly downbeat session in Asia, although key bourses including Shanghai and Tokyo remained shut.
On Wall Street, stocks were little changed, with all eyes on the central bank's policy setting Federal Open Market Committee (FOMC), which opened the final session of its two-day meeting on Wednesday.
"The Fed’s rate hike move might be broadly priced in, but markets are clearly nervous that an even more hawkish FOMC might prompt a surge in volatility that could push indices back below last week’s lows," Chris Beauchamp, chief market analyst at online trading platform IG, said.
The dollar drifted lower versus the euro and yen.
Trading 'cautiously'
"Stocks across Europe are trading cautiously ahead of today's Fed announcement," City Index analyst Fiona Cincotta told AFP.
"Stock markets often fall in reaction to rising interest rates because the cost of borrowing becomes more expensive and earnings and growth slows."
The Fed is forecast to unveil a half-percentage-point interest rate hike -- its biggest increase since 2000 -- as global central banks race to tame galloping inflation in the wake of the Ukraine war.
The announcement is due one day before the Bank of England is also predicted to deliver a hike.
India's central bank unexpectedly ramped up its key rate by 40 basis points to 4.4 percent on Wednesday.
Policymakers are seeking to tackle runaway prices but risk damaging global economic recovery from the pandemic.
Investor sentiment also remains dogged by fallout from Russia's ongoing Ukraine invasion, which has fuelled bumper gains for many raw materials including crude.
That has, in turn, sent inflation accelerating to multi-decade highs in nations including Britain and the United States.
Oil was more than three-percent higher after the latest EU crackdown on Russia, which is a major producer of crude.
"We now propose a ban on Russian oil.This will be a complete import ban on all Russian oil, seaborne and pipeline, crude and refined," European Commission chief Ursula von der Leyen told the European Parliament.
But, she added, "we will make sure that we phase out Russian oil in an orderly fashion", with crude banned gradually over the next six months and refined fuels by the end of the year.
Hungary, however, warned it could not vote for the ban "in this form".The country is highly dependent on Russian crude.
The EU executive also proposed excluding Russian bank Sberbank from the SWIFT network among its measures.
'EU tightens screw'
"As the EU tightens the sanctions screw on Russia by bringing in a phased ban on its crude oil, worries about global supply have reared up again," said Susannah Streeter, senior analyst at Hargreaves Lansdown.
"The price of the benchmark Brent scurried up ...to above $108 a barrel after the toughened up stance emerged."
Oil traders were already on tenterhooks before Thursday's gathering of OPEC and other key producers including Russia, who will discuss whether or not to lift output more than expected.
Key figures at around 1545 GMT
London - FTSE 100: DOWN 0.90 percent at 7,493.45 points (close)
Frankfurt - DAX: DOWN 0.49 percent at 13,970.82 points (close)
Paris - CAC 40: DOWN 1.24 percent at 6,395.68 points (close)
EURO STOXX 50: DOWN 0.96 percent at 3,724.99
New York - Dow: DOWN 0.2 percent at 33,059.98
Brent North Sea crude: percent at $ per barrel
West Texas Intermediate: percent at $ per barrel
Hong Kong - Hang Seng Index: DOWN 1.1 percent at 20,869.52 (close)
Tokyo - Nikkei 225: Closed for a holiday
Shanghai - Composite: Closed for a holiday
Euro/dollar: UP at $1.0546 from $1.0521 on Tuesday
Pound/dollar: DOWN at $1.2491 from $1.2499
Euro/pound: UP at 84.46 pence from 84.18 pence
Dollar/yen: DOWN at 129.99 yen from 130.14 yen
