The pan-European STOXX 600 was up 0.7% at 0935 GMT, on track to snap a three-day losing streak after clocking its biggest January gain since 2015, as a milder winter and China's reopening brightened the outlook for the euro zone economy.

The Euro STOXX Volatility index slipped to an over one-year low, hinting at easing investor anxiety.

Rate-sensitive technology and real estate stocks jumped around 3% each, with the former hitting a ten-month high.

The ECB is expected to raise its deposit rate by 50 basis points (bps) to 2.5% and pencil in more hikes in the next few months, with the only open question being how big these would be. The Bank of England is also poised to raise interest rates by 50 bps later in the day.

"Markets are looking for indications of where rates go from here; given the mixed signals from core inflation remaining sticky, all eyes will be on what the ECB does next," said Edward Stanford, head of European equity strategy at HSBC PLC.

Wall Street's main indexes eyed a higher open, with the S&P 500 and Nasdaq jumping on Wednesday after investors took a dovish cue from Chair Jerome Powell's remarks, following the Fed's 25-bps hike.

Telecom Italia climbed 9.0% to the top of STOXX 600 after receiving a non-binding bid for a controlling stake in its fixed-line network from U.S. investment firm KKR.

Frankfurt-listed shares of Meta Platforms Inc soared 18% on an upbeat first-quarter revenue forecast and a $40-billion share buyback.

Microchips supplier Infineon gained 6.3% after bumping up its 2023 outlook, while French software maker Dassault Systemes rose 4.3% on strong 2023 revenue growth forecast.

Shell advanced 2% after a record $40-billion profit in 2022, while Spain's Santander gained 4.1% on reporting an annual growth of 1% in fourth-quarter net profit.

Austrian energy group OMV dropped 5.5% after fourth-quarter core earnings missed estimates.

Earnings growth estimates for STOXX 600 companies during the fourth quarter have halved to 7.3% from 14.5% at the start of January, Refinitiv data showed on Tuesday.

"Earnings have undershot expectations which would suggest that the effects of economic slowdown are beginning to be felt on corporate activity," Stanford added.

(Reporting by Ankika Biswas in Bengaluru; Editing by Saumyadeb Chakrabarty and Janane Venkatraman)

By Ankika Biswas