WASHINGTON - Caution reigned on stock markets ahead of an expected interest rate hike from the Federal Reserve as inflation remains at decade-high levels despite moderate slowdowns.
Wall Street's main indices posted modest gains in morning trading, with the Dow adding 0.7 percent.
European stocks finished moderately lower, with London losses cushioned by news that UK inflation nudged lower in November.
Meanwhile, Frankfurt and Paris also fell despite the Ifo research institute's forecast that Germany's recession could be milder than previously predicted.
Asian stocks rose following Tuesday's rebound on Wall Street.
The dollar drifted lower against its main rival currencies.
The Fed is forecast to increase borrowing costs 50 basis points Wednesday after four 75-point rises in a row.
The US central bank has embarked on an all-out campaign to cool demand in the world's biggest economy, raising rates six times this year with interest-sensitive sectors like housing already reeling from tightening policy.
The US central bank's post-meeting statement and boss Jerome Powell's comments are the main focus for traders, along with the Fed's infamous "dot plot" chart of the rate outlook.
"At the end of the day, it's Jerome Powell, and the Fed, who will either give a green light for a modest Santa rally (for equities), or tell investors that Santa is stuck in a snow storm this year," noted SwissQuote analyst Ipek Ozkardeskaya.
Investors will be looking for indications on the pace of future rate hikes, as well as what could be the "terminal rate", or the highest interest rate before the Fed begins lowering rates again.