Renault shares rise 5% after reports of Nissan-Honda merger talks; European stocks mixed

European stocks were mixed on Wednesday, as investors reacted to U.K. inflation data and awaited the latest monetary policy decision from the U.S. Federal Reserve.

The pan-European Stoxx 600 was little changed by 8:45 a.m. London time, with sectors trading in mixed territory.

U.K. inflation rose to 2.6% in November, new figures showed on Wednesday, coming in line with expectations. The Bank of England is widely expected to hold rates steady at its final monetary policy meeting of the year on Thursday.

Investors are also awaiting a monetary policy update from across the Atlantic, with the Fed set to update its monetary policy on Wednesday. Traders are pricing in a 95% chance of a quarter-point cut from the central bank, according to CME Group’s Fed Watch tool.

Investors will be paying close attention to Fed policymakers’ Summary of Economic Projections and Fed Chair Jerome Powell’s press conference, seeking clues about what might happen in the months ahead.

Back in Europe, shares of French carmaker Renault jumped more than 5% by 8:42 a.m. London time. The company, which owns a minority stake in Nissan, traded higher after reports that Nissan and Honda were entering into merger talks. Nissan’s Tokyo-listed shares gained more than 20% during Asia’s trading session Wednesday, marking the automaker’s best day in at least 40 years.

— CNBC’s Lisa Kailai Han contributed to this market summary