European and US stock markets advanced while the dollar was largely steady on Wednesday as attention switched to the Federal Reserve and the size of its upcoming interest rate hike.

Tuesday saw a steep drop on Wall Street as traders pored over more company earnings that pointed to fallout caused by decades-high inflation.

After markets closed both Google and Microsoft reported disappointing earnings, but shares in both companies shot higher as trading got under way.

"The takeaway for many apparently is that their results and/or guidance was better than feared," said market analyst Patrick J. O'Hare at

Shares in Google jumped 6.6 percent and Microsoft stock climbed 4.8 percent.

They helped fuel a 2.5-percent rally in the tech-heavy Nasdaq Composite.

"Unlike a lot of other companies, it would appear that investors have a higher tolerance for misses from the likes of Microsoft and Google, although when you dig into the details, the numbers are still very good," said Michael Hewson at CMC Markets.

But with both companies trading close to their lowest levels this year "a lot of bad news was probably already in the price," he added.

The blue-chip Dow was 0.4 percent higher in late morning trading, while the broader S&P 500 rose 1.4 percent.

In Europe, shares in London rose 0.6 percent, Paris climbed 0.8 percent and Frankfurt added 0.5 percent.

While traders will continue to sift over company results and economic data early in the US trading session, attention will later shift to the Fed's rate decision.

Central banks are seeking to combat runaway prices by hiking interest rates, even though that risks pushing economies into recession.

The US central bank is widely tipped to announce a 0.75-percentage-point increase in interest rates, with traders particularly interested in any indications whether it will keep up this pace of rate hikes.

"This increase in the interest rate is already very much priced in," noted Naeem Aslam, chief market analyst at Avatrade.

He added that should the Fed indicate a plan to raise rates by another 75 basis points at its next meeting, "that would be highly bullish for the dollar".

Focus was also on gas prices as Russian energy giant Gazprom slashed deliveries of the fuel to Europe via the Nord Stream pipeline.

EU states have accused Russia of squeezing supplies in retaliation for Western sanctions over Moscow's war in Ukraine.

The price of natural gas reference, Dutch TTF, rose only marginally after strong gains on Tuesday after Gazprom announced the cut.

The Fed is expected to lift rates 75 basis points as US officials including bank boss Jerome Powell prioritise fighting inflation, even at the expense of economic growth
The Fed is expected to lift rates 75 basis points as US officials including bank boss Jerome Powell prioritise fighting inflation, even at the expense of economic growth GETTY IMAGES NORTH AMERICA via AFP / WIN MCNAMEE

On the corporate front, Switzerland's scandal-hit banking giant Credit Suisse appointed a new chief executive as higher litigation costs and financial market volatility pushed it deeper into the red.

Ulrich Koerner, head of asset management at the bank, takes the reins from Thomas Gottstein on Monday.

The bank has been hit by a series of scandals and crises including the implosions of financial services firms Greensill and Archegos last year.

After starting the day lower on the Swiss stock exchange, Credit Suisse shares rose one percent.

New York - Dow: UP 0.4 percent at 31,888.11 points

EURO STOXX 50: UP 1.0 percent at 3,609.42

London - FTSE 100: UP 0.6 percent at 7,348.23 (close)

Frankfurt - DAX: UP 0.5 percent at 13,166.38 (close)

Paris - CAC 40: UP 0.8 percent at 6,257.94 (close)

Tokyo - Nikkei 225: UP 0.2 percent at 27,715.75 (close)

Hong Kong - Hang Seng Index: DOWN 1.1 percent at 20,670.04 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,275.76 (close)

Euro/dollar: UP at $1.0132 from $1.0126 Tuesday

Pound/dollar: UP at $1.2042 from $1.2030

Euro/pound: UP at 84.14 pence from 84.09 pence

Brent North Sea crude: UP 2.2 percent at $106.67 per barrel

West Texas Intermediate: UP 2.6 percent at $97.49 per barrel