World Markets Edge Higher Ahead of Fed Statement

World stock markets rose sharply Wednesday after a batch of upbeat earnings reports and expectations that the U.S. Federal Reserve would indicate it will keep its easy monetary policy for quite a while yet.

In Europe, the FTSE 100 index of leading British shares closed up 70.68 points, or 1.4 percent, at 5,107.89 while Germany's DAX rose 90.88 points, or 1.7 percent, to 5,444.23. The CAC-40 in France was 86.08 points, or 2.4 percent, higher at 3,670.33.

And on Wall Street, the Dow Jones industrial average was up 122.28 points, or 1.3 percent, at 9,894.19 around midday New York time while the broader Standard & Poor's 500 index rose 11.82 points, or 1.1 percent, to 1,057.23.

Sentiment, particularly in Europe, was buoyed by some forecast-busting earnings from the likes of British retailer Marks & Spencer PLC, French bank Societe Generale SA and German sportswear company Adidas AG.

Though the earnings helped provide some support in Europe's markets, trading has been volatile of late and could well remain so in the coming days through to Friday's closely watched U.S. nonfarm payrolls figures for October — the data often set the tone in equity markets for a week or two.

Over the last week or two, the rally in stocks has faltered amid concerns about the pace of the global economic recovery.

"Admittedly, valuations now look stretched after the gains that have been racked up this year but the favorable monetary policy backdrop and the improvement in the economic data that have fueled the rally should persist over the next few quarters," said John Higgins, an analyst at Capital Economics.

The Fed takes center stage later when it unveils its latest interest rate decision. Though no shift in interest rates is expected, investors will be on the lookout for any changes to the accompanying statement — specifically to see if the Fed is turning more optimistic about the economic outlook.