By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets moved cautiously higher on Wednesday, with what is likely to be a volatile day ahead as investors waited for the much-anticipated monetary-policy decision from the U.S. Federal Reserve.
The Stoxx Europe 600 index rose 0.2% to 293.73, but is swinging between small gains and losses.
Shares of Nordea Bank AB gave up 3.8% to 75.75 Swedish kronor ($11.8) after the Swedish government sold 260 million ordinary Nordea shares at 75 kronor. The sale reduced the government's share holding in the bank to 7% from 13.4%.
Shares of Aggreko PLC dropped 3% after UBS cut the temporary-power products firm to neutral from buy.
For most investors, however, the focus was firmly on the U.S. Fed's policy meeting later in the day. A statement is expected after the European markets close, followed by a press conference by Chairman Ben Bernanke, where market participants will be looking for any hints about tapering the bank's quantitative easing program. Read: How to trade the Federal Reserve decision
After a strong spring-rally boosted by central bank liquidity, markets started selling off in late May on worries the U.S. central bank will soon scale back its aggressive easing program.
"Today could dictate the rest of the summer and decide whether it will be one of very short or long nights for markets. The reality is that not much has changed data-wise since Bernanke's [Joint Economic Committee] testimony on May 22, and therefore he has an opportunity to say that the Fed are still data-dependent and leaving no set timetable for tapering," said analysts at Deutsche Bank in a note.
U.S. stock futures pointed to a mixed open on Wall Street.
Back in Europe, shares of Alcatel-Lucent jumped 4.8% after the telecoms-equipment firm announced a cost-cutting plan aimed at trimming 1 billion euros ($1.34 billion) and selling at least EUR1 billion of assets by 2015.
France's CAC 40 index rose 0.2% to 3,867.39.
Germany's DAX 30 index added 0.5% to 8,274.60 and the U.K.'s FTSE 100 index inched 0.1% higher to 6,376.66.
Outside the major index, shares of Hennes & Mauritz AB climbed 1.1% after fashion retailer said sales had got off to a good start in June and announced plans to expand its online marketplace. Profit for the second quarter, however, missed analysts' expectations.
Shares of Konecranes Oyj slid 6.1% after the industrial crane firm lowered its full-year guidance.