LONDON, Nov 1 Reuters Oil prices rose more than 1 on Wednesday ahead of the keenly watched meeting of the U.S. central bank for clues on interest rate policy, while the conflict in the Middle East remains in focus.

Brent January crude futures were up about 1.1, or 90 cents, to 85.92 a barrel by 1042 GMT. U.S. West Texas Intermediate crude futures also gained 1.1, or 90 cents, to 81.92 a barrel.

Crude prices are steadying ahead of a key issuance update by the Treasury and FOMC rate decision, said OANDA analyst Edward Moya, referring to the Federal Open Market Committee that sets the direction of U.S. monetary policy.

The Fed, which will end its meeting on Wednesday, is widely expected to hold rates steady.

In Europe, October inflation in the Euro zone was at its lowest level in two years, a Eurostat flash reading showed, leading to expectations the European Central Bank is unlikely to hike interest rates soon. The Bank of England is expected to meet on Thursday.

Interest rate hikes aimed at taming inflation can slow economic growth and dampen oil demand.

In China the world39;s largest oil importer  factory activity unexpectedly contracted in October, a private survey showed on Wednesday, adding to downbeat official figures from a day earlier and raising questions over its fragile economic recovery.

Geopolitical risks remain and that seems to be offsetting some of the record production levels that are coming from the U.S., added Moya.

Crude oil inventories in…