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STOXX 600 up 0.5

June 12 Reuters European shares gained on Wednesday, supported by a drop in euro zone bond yields ahead of the release of crucial U.S. inflation data and the outcome of the Federal Reserve39;s policy meeting later in the day.

The panEuropean STOXX 600 was up 0.5 as of 0837 GMT, after two sessions of declines amid French political uncertainty.

What European investors will be looking from the Fed is to see if there are really credible signs that they could cut rates this year, said Altaf Kassam, EMEA head of investment strategy and research at State Street Global Advisors.

The market is just trying to get a feeling if inflation is remaining sticky or is actually coming down and what that means for the Fed rate cut projections.

Most sectors traded higher, with a 1.3 gain in European lenders being the biggest boost, while automobile stocks underperformed with a 1 drop.

European equities hit record highs last week after the European Central Bank39;s first rate cut in five years but have since pulled back due to political tremors domestically and as hot U.S. jobs data dimmed hopes of an early Fed rate cut.

The Fed is widely expected to keep rates unchanged, but the focus will be on its forecast for rate cuts. Market participants expect the socalled dot plot to be whittled down to one or two rate cuts this year,…