By Michele Maatouk Of DOW JONES NEWSWIRES LONDON (Dow Jones)--European stocks posted gains Wednesday, led higher by banking and insurance stocks, and supported by positive euro-zone economic data. Data showed the German flash manufacturing purchasing managers' index rose to a stronger-than-expected 53.1 in December, a sign the private sector moved further into expansionary territory. Later, the euro-zone composite PMI also came in slightly better than expected, rising to 54.2 in December from 53.7 in November, showing the economy continued to grow on the back of gains in both the manufacturing and services sectors. Nonetheless, an underlying tone of caution remained ahead of the Federal Open Market Committee's rate decision, and volumes were thin. By 0910 GMT, the pan-European Stoxx 600 index was up 0.7% at 248.9, London's FTSE 100 rose 0.8% to 5327.1, Frankfurt's DAX was 0.8% higher at 5856.9, and the CAC-40 in Paris rose 0.8% to 3866.5. On the economic calendar, harmonized euro-zone inflation figures are due at 1000 GMT. In the U.S., highlights include inflation data and housing starts at 1330 GMT, but the most keenly awaited news will be the FOMC's rate decision, which is expected after the European close, at around 1915 GMT. With the Federal Reserve widely expected to keep rates unchanged, what will be most closely scrutinized will be the language and tone of the statement, said Michael Hewson, market analyst at CMC Markets. "They're not going to change the rates; that's a given. But what investors will be looking for is evidence of a withdrawal of stimulus," added Hewson. On the data front, the U.S. consumer price index is likely to attract the most attention, particularly in light of Tuesday's disappointing producer price index. If the data come in worse than expected, this could raise expectations that the Federal Reserve might increase rates sooner than originally anticipated, said Hewson. "The market will now look to today's U.S. CPI figures to see if there is a similar trend emerging here with respect to possible inflation." On Wall Street Tuesday, financial stocks led the market lower as rising credit-card delinquency rates weighed on Capital One, JP Morgan and others, and as concerns percolated over those regional banks, including PNC Financial and SunTrust, that are yet to repay government loans. After marking a new closing high for 2009 on Monday, the Dow Jones Industrial Average closed Tuesday's session down 49.05 points, or 0.5%, at 10,452.00. The Standard & Poor's 500 index dipped 6.18, or 0.6%, to 1107.93, snapping a four-session winning streak, while the Nasdaq Composite closed down 11.05, or 0.5%, at 2201.05. In Asia, shares were mostly lower Wednesday after a weak session on Wall Street and due to some caution ahead of the Federal Reserve's meeting, but banks in Japan surged on the prospect of a more relaxed timetable for the introduction of stricter capital requirements. Japan's Nikkei 225 was up 0.9%, but Hong Kong's Hang Seng index was 1.1% lower and the Shanghai Composite index was off 0.6%. Financial stocks in Japan were helped by a report in the Nikkei daily that the Basel Committee on Banking Supervision, which has been discussing introducing stricter capital requirements since September 2008 in an effort to prevent a recurrence of the global financial crisis, has agreed to effectively delay the enforcement of new capital adequacy rules for large banks, opting to create a transition period of at least 10 years. In the currency markets, the dollar was stable against the euro after rising to a 10-week high against the common currency in New York Tuesday, as expectations that the Fed may provide a more optimistic outlook for the U.S. economy grew after better-than-expected U.S. industrial production data for November. At 0920 GMT, the euro was quoted at $1.4547, barely changed from $1.4538 in late New York business Tuesday. The dollar was trading at Y89.77, little changed from Y89.61. Elsewhere, spot gold was quoted at $1132.10 per troy ounce, up $7.30 from the New York close, while Nymex January crude oil futures were up 59 cents at $71.28 per barrel. The European bond markets were little changed, with March bund futures up 0.04 at 122.52. -By Michele Maatouk, Dow Jones Newswires; +44-20-7842-9447; michele.maatouk@dowjones.com

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