European stocks steady with eyes on Fed, Dutch vote

European stock markets flatlined Wednesday with investors playing it safe ahead of a likely Federal Reserve rate hike and the outcome of a closely watched Dutch election.

London scored slender gains as the British unemployment rate struck a 41-year low, while Frankfurt was flat.

The US central bank's Federal Open Market Committee (FOMC) is all but certain to announce an interest rate hike later on Wednesday.

"Today's main event -- apart from the Dutch elections of course -- is the FOMC decision," said Rabobank analyst Philip Marey.

Investors are waiting in the wings until uncertainty surrounding both events is cleared up.

Aided by stronger oil, Wall Street opened cautiously higher, with the Dow edging up less than 0.2 percent.

"Traders are taking no chances," said Fawad Razaqzada, an analyst at Forex.com.

- Yearning for Yellen -

Expectations are such that markets will react badly if Fed chief Janet Yellen fails to deliver on a 0.25-point rate rise, or even if she signals too much Fed caution moving forward.

"If the Fed doesn't deliver the rate rise, it sure will shock the markets and cause the dollar to collapse," said Fawad Razaqzada at Forex.com.

In Europe, millions of Dutch voters go to the polls Wednesday in an election overshadowed by a blazing diplomatic row with Turkey, with all eyes on the fate of far-right MP Geert Wilders.

Following last year's shock Brexit referendum and Donald Trump's surprise victory in the US presidential polls, the Dutch vote is seen as a litmus test of the strength of far-right and populist parties ahead of crucial elections in France and Germany later this year.

"There is not a lot for the (eurozone) region today ... so any political news out of the Netherlands might be its main driver," said Spreadex analyst Connor Campbell.

Most Asian stock markets retreated as investors stayed on the sidelines ahead of the Fed's call.

- Oil bounces -

Oil prices rebounded after the International Energy Agency said in its latest monthly report that OPEC crude producing nations were complying with a landmark deal to curb a global supply glut.

The market had dipped after data emerged showing key producer Saudi Arabia increased production last month, raising questions about the OPEC cartel's reduction commitment, just as US shale output expands.

On currency markets the pound edged up after hitting an eight-week low in New York as Britain prepares to trigger its exit from the European Union.

The euro also firmed, but is struggling as investors nervously await the Dutch election outcome.

- Key figures around 1335 GMT -

London - FTSE 100: UP 0.1 percent at 7,365.46 points

Frankfurt - DAX 30: FLAT at 11,989.37

Paris - CAC 40: UP 0.1 percent at 4,979.14

EURO STOXX 50: UP 0.2 percent at 3,404.50

New York - Dow: UP 0.2 percent at 20,868.35

Tokyo - Nikkei 225: DOWN 0.2 percent at 19,577.38 (close)

Hong Kong - Hang Seng: DOWN 0.2 percent at 23,792.85 (close)

Shanghai - Composite: UP 0.1 percent at 3,241.76 (close)

Euro/dollar: UP at $1.06147 from $1.0603 Tuesday

Pound/dollar: UP at $1.2200 from $1.2151

Dollar/yen: DOWN at 114.71 yen from 114.77 yen

Oil - Brent North Sea: UP 73 cents at $51.65 per barrel

Oil - West Texas Intermediate: UP 78 cents at $48.50

burs-jh/spm