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Europe ends 1% up on oil rally and earnings; Fed eyed

European markets closed sharply higher on Wednesday, as investor sentiment was boosted by earnings and a sharp rebound in oil prices.

Oil jumps

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The pan-European STOXX 600 finished up over 1 percent provisionally, with all major European indices posting strong gains at the close.

Investors kept a close eye on the U.S. Federal Reserve, as its two-day policy meeting was nearing an end, but were also buoyed a rally in the oil price. The commodity turned sharply higher on Wednesday afternoon after Mexico's state oil company Pemex said it had received a license from the U.S. to import U.S. crude to be refined at Mexican refineries.

U.S. crude rallied almost 6 percent by Europe's close, up at $45.72, while Brent was up $2.16 at $48.98 a barrel. Oil stocks jumped on the back of this, with Tullow Oil finishing up 6.8 percent, with Seadrill and Subsea 7 both closing sharply above 5.5 percent.

Fed ahead

U.S. stocks traded higher Wednesday, following the oil price recovery and encouraging results from Apple. Asia markets, meanwhile, ended mostly lower, as losses in energy plays dragged down most stocks.

Markets have been jumpy in recent months, awaiting the Fed's first interest rate hike in nine years. While most analysts don't expect that hike to come at Wednesday's meeting, they'll be scrutinizing the Fed's statement for cues on when it will move. The FOMC releases its statement at 2 p.m. Eastern time (ET).

Meanwhile, Chile's Antofagasta cut its annual copper production forecast for the third time this year as it struggles with sliding commodity prices. Antofagasta shares slumped during trade, however pared to close 1.5 percent down. Despite this, the basic resources sector closed up 0.8 percent provisionally.

Volkswagen higher; Lloyds sinks

Aside from the Fed and commodities, earnings season kept investors on their toes.

Scandal-hit carmaker Volkswagen reported an operating loss of 3.48 billion euros for the third quarter and said it expects its 2015 operating profit for both the group and the passenger cars business to be down significantly year-on-year. Despite the scandal, shares in the carmaker finished sharply higher, at 4 percent.

Porsche adjusted its guidance as a result of the news and says it now sees 2015 profit after tax of 0.8 billion to 1.8 billion euros; causing shares in the Volkswagen-owned carmaker to surge, ending 4.3 percent higher.

Apple suppliers rally

Apple reported fiscal fourth-quarter earnings of $1.96 per share on sales of $51.5 billion on Tuesday, beating analysts estimates. The news caused its European supplier Dialog Semiconductor to rally, closing up 7 percent.

Heineken, the world's third-largest brewer, posted a rise in third-quarter revenue and beer volumes helped by strong sales in Europe, the Americas and Asia Pacific, sending shares to finish up 4 percent.

Britain's Lloyds Banking Group was hit by a further 500 million pounds ($765 million) charge to compensate customers that were mis-sold loan insurance by the lender. Lloyds also reported an underlying pre-tax profit of 2 billion pounds in the third-quarter, down from 2.2 billion pounds a year ago. Shares in the bank slipped over 4 percent.