[LONDON] Europe's major stock markets firmed on Wednesday, closing higher ahead of the US Federal Reserve's decision on borrowing costs in the world's biggest economy.

Investors were waiting on the US central bank's announcement, scheduled for 1800 GMT and set to signal the next step for US interest rates.

"European stocks are putting in a robust performance as investors pile in ahead of the US Federal Reserve's interest rate decision later today," said analyst Manoj Ladwa at brokerage TJM Partners in London.

"Given recent weak economic data, market participants are expecting the Fed to hold its hand.

"But any shock announcement is likely to send the markets into a tailspin." At the height of the global financial crisis in 2008 the Fed slashed interest rates to near zero to stimulate growth, and introduced an unprecedented bond-buying scheme that effectively kept long-term borrowing costs down.

US ECONOMIC PROSPECTS

The market's attention will be on how the Fed views US economic prospects for the months to come, with most bets on a rate rise being delayed at least until March.

London's benchmark FTSE 100 index of major blue-chip companies added 1.14 per cent across the session to close at 6,437.80 points.

In the eurozone, Frankfurt's DAX 30 closed up 1.31 per cent to 10,831.96 points with Volkswagen posting better than expected results, albeit unveiling a first quarterly loss in 15 years on the back of the global pollution-cheating scandal.

In Paris, the CAC 40 rose 0.9 per cent compared with Tuesday's close to 4,890.58.

The European single currency meanwhile strengthened to US$1.1069 from US$1.1041 late in New York on Tuesday.

US stocks opened mostly higher, the Dow Jones Industrial Average climbing 0.26 per cent to 17,627.96 points in the first five minutes of trading.

The broad-based S&P 500 advanced 0.16 per cent to 2,069.11, while the tech-rich Nasdaq Composite Index dipped 0.05 per cent to 5,027.70.

The two-day Fed meeting opened Tuesday amid more signs of slower US economic activity that would further justify a delay to increasing the federal funds rate: consumer confidence sagged and durable goods orders fell for a second straight month in September.

"We have reached the penultimate decision of the year and despite the Fed's constant insistence that rates should rise this year, the market is becoming increasingly confident that it won't happen," said Oanda analyst Craig Erlam.

"Investors have been doubting the Fed's position for a while and the softening in the data in the last couple of months has only increased the belief that rates won't rise."

In contrast to Europe, Asian equities mostly fell on Wednesday as the weak US economic data sent investors running for safe havens.

The US figures come after a Labor Department report at the start of the month showed jobs growth was weaker than expected in September, increasing the chances the Fed will keep rates on hold until the new year.

Policymakers are "probably more divided about when to raise rates than at any other time in the past few years", noted CMC Markets analyst Michael Hewson.

"While no change is expected today the statement will be closely scrutinised for any change of tone with respect to the timing of a rate rise this year."

VOLKSWAGEN DRIVES FRANKFURT HIGHER

Away from the Fed, Frankfurt stocks motored ahead on the back of well-received third-quarter results from troubled German carmaker Volkswagen, whose share price climbed 3.99 per cent higher to close at 109.35 euros.

The stock was boosted by earnings that were better than expected given the massive diesel emissions scandal roiling the company.

The auto giant earlier touched an intra-day high of 109.9 euros after it said net loss for the third quarter reached 1.67 billion euros. Analysts had forecast on average a loss of 2.12 billion.

VW also forecast that 2015 sales revenue would increase by up to 4.0 percent.

In 2014, VW sold 10.217 million vehicles worldwide and booked operating profit of 12.697 billion euros on sales revenues of 202.5 billion euros.

"Investors (are) appearing to look at Volkswagen's decent sales projections going forwards, rather than the horror-show that was the losses and charges related to its emissions scandal," noted Spreadex trader Connor Campbell.

AFP