European shares recovered on Wednesday from the previous session’s three-month low as softer oil prices improved risk appetite before the Federal Reserve’s policy decision. The pan-European STOXX 600 gained 0.5% to 637.09 points, while traders priced a 93% chance of a 25-basis-point U.S. rate increase, which would be the first hike under Fed Chair Kevin Warsh and since 2023. Inflation risks linked to the Iran conflict have pushed global bond yields higher and weighed on riskier assets. The European Central Bank raised rates for the second time this year last week, and markets still expect another 25-basis-point increase by year-end, although slowing euro zone wage growth has offered policymakers some reassurance. Oil declined nearly 1% after an unexpectedly large U.S. crude inventory build, supporting travel and leisure stocks while energy shares lagged. British government bond yields fell sharply even as August inflation accelerated to 3.1% from 2.9% in July. Individual movers included Soitec, Barratt Redrow, Pan African Resources and Babcock International.