European stocks diverge

German stocks sank but French equities rose Wednesday in cautious deals before a US interest rate decision, while London shot up as Britain unveiled its latest annual budget.

London's benchmark FTSE 100 index of top companies rose 0.94 percent to 6,902.20 points after the government upgraded its growth forecast to 2.5 percent in the latest budget, saying Britain is moving "from austerity to prosperity".

Frankfurt's DAX 30 index however fell 0.48 percent to 11,923.02 points, while the CAC 40 in Paris edged up 0.12 percent to 5,034.75 points.

The euro climbed to $1.0609 from $1.0590 late in New York on Tuesday. The European single currency continued its recovery after falling on Monday to $1.0458 -- the lowest level for more than 12 years.

British finance minister George Osborne was delivering Wednesday his coalition government's last annual budget ahead of a looming general election on May 7.

Later on Wednesday, the US Federal Reserve's decision-making Federal Open Market Committee (FOMC) will wrap up a two-day policy meeting.

"With the pre-election budget out today and the FOMC rate decision, we can expect to see a choppy day," said trader Farhan Ahmad at broker Tradenext.

"The Chancellor has already promised that there will be no budget giveaways but with several budget issues leaked to the press already, it seems that Mr Osborne is all too aware that this is an important chance to woo voters."

London's energy sector rallied as Osborne unveiled £1.3 billion (1.8 billion euros, $1.9 billion) in aid for Britain's North Sea oil industry, whose operations have been hit by slumping global oil prices.

Anglo-Dutch energy group Royal Dutch Shell's 'A' shares soared 1.62 percent to 2,007 pence and British peer BP added 1.35 percent to 431.65 pence.

Elsewhere, Asian markets mostly advanced while Wall Street opened down Wednesday as investors await the end of the Fed's policy meeting later in the day, hoping for clues about its plans for the future path of interest rates.

- Fed 'patient' removal -

Many Fed watchers anticipate the FOMC will delete its reference to being "patient" -- used in the December and January statements -- about raising near-zero rates in its latest post-meeting statement.

"Ever since the Fed first announced that it would begin tapering its asset purchases back at the end of 2013, market participants have been trying to predict when the first rate hike would follow," said analyst Craig Erlam at traders Oanda.

"More than 12 months on and it seems like the first hike is imminent; all we?re waiting on now is the Fed to remove its pledge to be 'patient' which in its words means no rate hike for at least the next two months.

"If that comes today, as has been widely speculated, that would mean an interest rate hike could come as early as June, although not necessarily that particular month."

US stocks opened lower Wednesday, with the Dow Jones Industrial Average sliding 0.47 percent to 17,765.72 points after five minutes of trading.

The broad-based S&P 500 lost 0.31 percent to 2,067.87, while the tech-rich Nasdaq Composite Index fell 0.27 percent to 4,924.06.

In Asia, Shanghai and Hong Kong were the stand-out performers, with investors buoyed by comments from Chinese Premier Li Keqiang that the government can support the economy if it continues to struggle.

Japan's Nikkei index rallied from early losses as Nintendo soared more than 21 percent, hitting its daily stop limit, after the company announced plans to enter the mobile gaming market.