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Shares Set for Second Day of Gains After Fed

European shares are expected to rise on Wednesday, buoyed by a rally in global equity markets after the Federal Reserve delivered a smaller cut than expected to U.S. rates but two major investment banks beat expectations with their results.

Spreadbetters in London expect Britain's FTSE 100 index to rise by 35 to 37 points, or as much as 0.7 percent at the start of trade, Germany's DAX to gain 48 to 72 points, or as much as 1.1 percent, and France's CAC 40 to rise 38 to 58 points, or by as much as 1.3 percent.

U.S. stocks rallied by more than 3 percent after the Fed cut rates by 75 basis points to 2.25 percent, less than the full percentage point markets had anticipated. But results from Goldman Sachs and Lehman Brothers both beat expectations, soothing some investor concern about the spread of the credit crisis.

"The fact the Fed just cut rates by 75 basis points last night - less than the 100 points that had been expected by a number of traders - did leave equities under a degree of pressure in the short term, but the negative sentiment didn't last long and Wall Street promptly resumed its rally with the DOW finishing the day over 400 points higher," said Claire Collingwood, a trader at CMC Markets in a note.

"As a result, the upward momentum is expected to continue in Europe this morning, although there has to be scope for yet further profit taking as traders incorporate the fact that dollar yields may remain attractive to some."

In Europe, industrial groups Rheinmetall and Royal Boskalis Westminster report earnings, while on the consumer side, Clarins, Benetton and British retailers Next and Kesa Electricals deliver updates.

A retreat in the price of commodities including gold and crude oil may weigh on shares in miners and energy companies, while the dollar holding above its recent record low against the euro may support exporters.