European shares inched lower on Wednesday, as investors adopted a cautious stance ahead of the U.S. Federal Reserve's interest rate decision, while also parsing a slate of corporate announcements.
The pan-European STOXX 600 (.STOXX) was down 0.2% at 576.58 by 0918 GMT, set to extend its losing streak to a fourth consecutive session.
Major regional benchmarks were also trading in the red, with ones in Germany (.GDAXI) and Spain (.IBEX) down 0.5% and 0.2% respectively.
Insurers (.SXIP) shed 0.8%, the most among peers, dragged by a 8.1% decline in Aegon (AEGN.AS) after it said it would move its legal domicile and head office to the U.S. from the Netherlands.
Industrial stocks (.SXNP), that buoyed the market in recent sessions, fell 0.5%, with defence firms weighing. The broader index (.SXPARO) lost 1.1% after gaining more than 2% in the previous two sessions.
The spotlight will remain on the U.S. Federal Reserve's decision later in the day, where the central bank is expected to trim interest rates by 25 basis points.
However, comments from Chair Jerome Powell will be scrutinised for clues on how the bank will approach monetary policy next year amid sparse economic data and the U.S. administration's push for lower rates.
"This may be another hawkish cut, but we definitely do not think the rate cutting cycle is over," said Guy Stear, head of developed markets strategy research at Amundi.
"We expect a pause in Q1, but think the Fed will cut twice in Q2 as the effects of the U.S. budget will lead to cuts in the spending habits of the less affluent U.S. consumer."
Bucking the trend on STOXX 600, commodity-linked stocks edged higher, with oil companies (.SXEP) and miners (.SXPP) up 0.7% and 0.6% respectively.
Renewable energy firms extended Tuesday's gains with Nordex (NDXG.DE) up 6%, Siemens Energy (ENR1n.DE) gaining 4% and Vestas Wind Systems (VWS.CO) up 4.6%. U.S. peer GE Vernova (GEV.N) on Tuesday, forecast higher 2026 revenue and boosted its share buyback plan.
French lawmakers narrowly approved the 2026 social security budget on Tuesday, handing the government a victory but at a political and financial cost.
"It does little to resolve France's underlying fiscal and political challenges... the broader state budget remains unsettled, and the narrow margin for this win highlights the government's continued vulnerability," said analysts at UBS Global Wealth Management.
