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European markets close higher; all eyes on Dutch election, Fed meeting

European markets closed higher on Wednesday ahead of a Federal Reserve rate-setting meeting in the U.S.

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The pan-European Stoxx 600 ended 0.44 percent higher with most sectors and major bourses trading in positive territory. Basic resources led the gains after China's iron ore and steel prices soared on infrastructure spending.

Oil and gas stocks were also higher as oil prices rebounded from a three-month low. Brent was trading 1.47 percent higher at $51.66 a barrel and WTI was up by 1.8 percent at $48.58. This came after Goldman Sachs said OPEC's compliance with output cuts remained high even though the group's monthly report indicated a rise in global crude stocks and a production jump from Saudi Arabia.

Looking at particular stocks, the drugmaker Hikma closed at the top of the European benchmark, up over 8 percent, after presenting a full-year core operating profit higher by 2.4 percent.

Shares of the Spanish Bankia ended up by about 3.2 percent after it received an approval to merge with Banco Mare Nostrum (BMN). It is understood that the merger will help recover public money used to prop up banks during the crisis.

By contrast, the French aircraft seat maker Zodiac Aerospace was at the bottom of the benchmark after another profit warning. Its shares sank over 16.2 percent. Hennes&Mauritz moved about 5 percent lower on Wednesday after the Swedish retailer posted lower-than-expected sales.

Meanwhile, in the U.S., the Dow Jones industrial average and broader S&P 500 both continued higher as investors eagerly anticipated a probable March interest rate hike.

Fed rates, Dutch election

Investors will be watching political developments in Europe with a special focus on the Netherlands, where voters will be choosing their next prime minister amid rising support for anti-establishment parties. The first exit polls are expected at around 8 p.m London time.

Another focus for market players is the Federal Reserve's monetary policy meeting. Chair Janet Yellen is due to announce the bank's latest decision at 6 p.m London time. Most market participants believe there is going to be an interest rate hike.

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In terms of data, employment in the euro zone increased 0.3 percent on a quarterly basis in the last quarter of 2016, the European statistics office Eurostat said. Also on Wednesday, the annual Institute of International Finance G-20 conference was underway in Frankfurt.

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