By Julien Ponthus and Danilo Masoni
LONDON (Reuters) - European shares held their ground near 4-week highs on Wednesday before a widely expected rate hike by the U.S. Federal Reserve.
The pan-European STOXX 600 (STOXX) benchmark index ended up 0.3 percent, while London's FTSE 100 (FTSE) and Frankfurt's DAX (GDAXI) both advanced around 0.1 percent.
"I don't expect much to be happening before the Fed," said ABR managing director Harry Scheper. He added that volumes were low, as they typically are ahead of U.S. rate decisions.
The statement from the U.S. central bank is due at 1800 GMT.
European shares have been under pressure this summer but they have rebounded over the last few days on hopes the U.S. could resume trade talks with China after the two countries moved ahead with new tariffs on each other's exports.
Easing worries over Brexit and the Italian budget, due on Thursday, helped bring investors' attention back to the region's cheaply valued equity market. Fresh deal-making activity also buoyed the market.
On Wednesday the STOXX was supported by gains in defensive sectors like consumer staples and healthcare, while cyclical stocks that drove most of the recent gains suffered.
Basic materials stocks led sectoral losers as after copper prices fell, weighed down by a firmer dollar ahead of the expected rate hike in the U.S. [MET/L]
Oil stocks also fell as investors took profit following strong gains this week driven by crude oil prices rising to four-year highs at above $80 a barrel. BP (L:BP) and Total (PA:TOTF) were down 0.3 percent and 0.1 percent respectively.
Autos were in focus on news that carmakers had triggered some Brexit contingency plans in Britain. After initial losses, their sectoral index (SXAP) recovered to end up 0.3 percent.
Among top movers, Indivior (L:INDV) declined 16 percent after the drugmaker revised its full-year earnings guidance as it sharply lowered its revenue expectation for opioid addiction drug Sublocade.
France's Bouygues (PA:BOUY) rose 2.7 percent after the stock was upgraded to overweight by JP Morgan.
Belgium's Telenet (BR:TNET) fell 2.1 percent after a rating cut by Barclays (LON:BARC).
Deutsche Bank (DE:DBKGn) lost 1.4 percent. The company dismissed speculation that it might seek a merger as "fictions" after media reports suggested Germany's biggest lender might seek tie ups with Switzerland's UBS (S:UBSG) or German peer Commerzbank (DE:CBKG).
UBS ended little changed and Commerzbank eased 0.6 percent.