European stocks rally after the open with Turkey in focus; Dax up 1.1%

European stocks opened sharply higher on Wednesday, after Turkey raised its key interest rates, calming fears about emerging markets.

Traders now readied for the outcome of the Federal Reserve’s two-day policy meeting later in the day for news on the fate of the central bank’s bond buying program.

During European morning trade, the EURO STOXX 50 jumped 1%, France’s CAC 40 advanced 1.1%, while Germany’s DAX 30 increased 1.1%. Elsewhere, Spain’s IBEX35 rallied 1.3% and Italy’s FTSE MIB index rose 1.2%.

Appetite for riskier assets improved after Turkey’s central bank announced aggressive rate hikes overnight in an effort to stem the lira’s decline.

Turkey's central bank raised its overnight lending rate to 12% from 7.75% and its repurchase rate to 10% from 4.5% in its first emergency meeting since 2011.

The move eased concerns over emerging markets, following a broad based selloff last Friday, triggered by worries over the impact of reduction in Fed stimulus and concerns over a possible slowdown in China.

Market players prepared for the outcome of the Fed’s policy meeting, amid expectations for a USD10 billion reduction in the central bank’s stimulus program. The policy meeting will mark the last for outgoing Fed Chairman Ben Bernanke, as current Vice Chair Janet Yellen prepares to take over.

Financial stocks were broadly higher, as French lenders BNP Paribas and Societe Generale rose 1.5% and 1.9%, while Germany's Deutsche Bank and Commerzbank jumped 1.4% and 3.1%.

Among peripheral lenders, Spanish banks Banco Santander and BBVA increased 1.7% and 2.1% respectively, while Italy's Intesa Sanpaolo and Unicredit advanced 1.6% and 1.8%.

Elsewhere, in London, FTSE 100 picked up 0.9% as gains in the mining sector boosted the benchmark index.

BHP Billiton and Rio Tinto rose 1.25% and 1.45% respectively, while Glencore Xstrata and Antofagasta climbed 2.1% and 4.5%.

Copper miner Anglo American saw shares rally 5% after well-received earnings and output reports. 

Meanwhile, across the Atlantic, U.S. equity markets pointed to a higher open. The Dow Jones Industrial Average futures pointed to a 0.5% increase, S&P 500 futures signaled a 0.55% gain, while the Nasdaq 100 futures indicated a rise of 0.85%.