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European stocks mixed after Wall Street record close

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Traders expect 25 bps cut from Fed

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Planned Trump-Xi meeting keeps markets upbeat

(Updates throughout after European market open)

By Elizabeth Howcroft

PARIS, Oct 29 (Reuters) - European stocks hovered near

recent highs on Wednesday, with sentiment helped by new AI deals

and the prospect of improving U.S.-China trade relations, while

traders waited for a U.S. Federal Reserve meeting, expecting a

25-basis-point rate cut.

Wall Street closed at a record high on Tuesday, after

Nvidia ( NVDA ) announced that it would build

seven supercomputers

for the U.S. Department of Energy, and Microsoft ( MSFT )

reached a deal

allowing OpenAI to restructure.

Japanese and South Korean stocks also hit new records

during Asian trading.

At 0946 GMT, the MSCI World Equity Index was up by less

than 0.1% on the day

Europe's STOXX 600 was up 0.1%, Germany's DAX

was down 0.1%, France's CAC 40 was unchanged

and London's FTSE 100 was up 0.5% having hit a new

record high.

American technology companies Microsoft ( MSFT ),

Alphabet and Meta are due to report earnings

later on Wednesday.

"Investors want to see not just solid numbers but

evidence of sustained AI monetisation and broadening demand

beyond the initial boom," said Charu Chanana, chief investment

strategist at Saxo.

TRUMP EXPECTED TO REDUCE U.S. TARIFFS ON CHINA

U.S. President Donald Trump was on the final leg of his

Asia trip,

in South Korea

, optimistic about advancing an unresolved tariff deal with

South Korea's Lee Jae Myung. Trump is then due to have talks

with Chinese President Xi Jinping in the port city of Busan on

Thursday.

Trump said

he expects

to reduce U.S. tariffs on Chinese goods in exchange for

Beijing's commitment to curb exports of fentanyl precursor

chemicals.

While the talks could ease market worries about an

escalating trade war, analysts warned that the bar for a market

reaction was high.

"With Wall Street futures at record highs and bullish

momentum already waning, its difficult to see how much of the

excitement isn't already priced in," said Matt Simpson, a senior

market analyst at City Index in Brisbane.

"So unless Trump and Xi deliver a joint statement with

actual details, appetite for risk may need another source to

extend the current moves."

MARKETS WAIT FOR FED MEETING

Market-watchers were waiting for the

Fed meeting

later in the session, at which a 25-basis-point cut is

almost fully priced in.

With the ongoing U.S. government shutdown having led to

a shortage of economic data, traders will be looking for any

comments hinting that the Fed will continue to cut rates in

December.

The Fed could also announce that it is stopping its

so-called

quantitative tightening (QT)

programme.

The prospect of lower U.S. rates kept

U.S. Treasuries

supported, with the 10-year yield at 3.9909%.

European government bond yields were steady, with the

benchmark German 10-year yield at 2.6275%.

In

currencies

, the Japanese yen was at 152.25 dollars per yen. The

yen had strengthened earlier in the session after U.S. Treasury

Secretary Scott Bessent stepped up his

criticism

of Tokyo's prolonged low rates.

The Australian dollar rose after

inflation data

showed prices rising faster than expected, reducing hopes

for a rate cut.

The euro was steady at $1.1643 and the dollar

index was up 0.2% on the day at 98.833.

"For short-term rates and FX post-decision reaction will

likely come down to Powell's interpretation of the inflation

risks," MUFG's head of research for global markets, David

Halpenny, wrote in a research note.

Oil prices rose

as traders were optimistic about the U.S.-China meeting.

Brent crude futures were up 0.2% at $64.55 a barrel,

while U.S. crude was up 0.2% at $60.26 a barrel.

Safe-haven gold traded at $4,024.29 an ounce.

(

Reporting by Elizabeth Howcroft in Paris and Ankur Banerjee in

Singapore, Additional reporting by Rae Wee in Singapor; Editing

by Sharon Singleton)