European shares inch lower ahead of Fed's big rate decision

European shares edged lower on Wednesday, as investors stayed on the sidelines ahead of an all-important interest rate decision by the US Federal Reserve that could mark the beginning of a monetary-easing cycle in the world's largest economy.

The pan-European STOXX 600 index was down 0.2 per cent at 516.15 points, led by losses in healthcare shares following reports that Novo Nordisk's Ozempic is "very likely" to be one of the next drugs targeted for a price cut in the United States.

The Danish drugmaker's shares were down 1.7 per cent.

Technology shares also pulled the markets down with a 0.7 per cent fall while miners slipped 0.5 per cent.

All major European markets were trading flat to lower.

Britain's FTSE 100 dipped 0.3 per cent after UK headline inflation stood at an annual rate of 2.2 per cent in August, unchanged from July, but price growth in the services sector - closely watched by the Bank of England - picked up.

The day will be monopolised by the US central bank's expected start of policy easing, with a decision on interest rates due at 1800 GMT. Money markets see a 63 per cent chance of a 50-basis-point reduction, according to CME's FedWatch Tool.

"Markets currently expect a 50-bps cut by the Fed, and it's very unlikely the Fed will surprise investors by going 25 bps. We expect the Fed to cut 50 bps to get ahead of downward trending labor market data, even as the inflation fight looks done," said Sonu Varghese, global macro strategist at Carson Group.

Investors will also keep a close watch on the euro zone's inflation data at 0900 GMT, while monitoring comments from European Central Bank's supervisors Claudia Buch and Elizabeth McCaul later in the day.

Italy's Campari slipped 6.1 per cent to the bottom of the benchmark index as CEO Matteo Fantacchiotti unexpectedly stepped down after only five months at the helm.

Reckitt Benckiser advanced 1.3 per cent following reports that the consumer goods giant launched early discussions with potential suitors for a sale of its homecare assets, which could be worth more than 6 billion pounds ($7.89 billion).

France's Ubisoft Entertainment jumped nearly 5 per cent to the top of STOXX 600 after BMO Capital Markets raised the rating on the stock to "outperform".