By Peter Nurse 

Investing.com – European stock markets traded firmly higher Tuesday, helped by bumper earnings from energy giant BP (LON:), ahead of the start of the Federal Reserve’s latest two-day policy-setting meeting.

At 04:30 ET (08:30 GMT), the contract in Germany traded 1% higher, in France climbed 1.6% and the contract in the U.K. rose 1.4%.

BP posted its second-highest quarterly in its history on Tuesday, with underlying replacement cost profit, the group’s preferred measure of profitability, more than doubling from a year earlier to $8.15 billion, after another huge quarter for its upstream and trading divisions.

The U.K.-based oil and gas major said it will increase its dividend by over 10% and added another $2.5 billion to its ongoing buyback program. Its stock rose 0.7% as a result.

Elsewhere, Credit Suisse (SIX:) stock rose 2.3% after the Swiss lender confirmed an extraordinary general meeting will take place later this month for shareholders to approve a proposed capital increase, as it seeks to raise 4 billion Swiss francs ($4.01 billion) in fresh capital.

Ocado (LON:) stock soared 22% after the grocery delivery company agreed a deal to develop South Korean retailer Lotte Shopping’s online business, providing a foothold into a growing Asian market.

Away from corporate news, the is widely expected to raise interest rates by 75 basis points on Wednesday at the conclusion of its meeting. 

Investors appear to be gaining confidence, helping stocks post strong gains, that the Fed will flag a reduction in the pace of its interest rate hikes in the future, potentially starting in December.

That said, there’s little sign that inflation is peaking in Europe.

increased by 10.7% last month from 9.9% a month earlier, data showed on Monday, suggesting the ECB still has a fair way to go with its rate hikes. 

Additionally, rose by a hefty 29.8% on an annual basis in September, better than expected but still only a small drop from the 32.7% increase seen the previous month.

The release is due later in the session, and is expected to show that this sector of the British economy remained in contraction in October. 

Oil prices rose Tuesday, paring losses from the previous session, with a weaker dollar helping boost confidence that has been hit by a resurgence in COVID-19 cases in China, the world’s largest crude importer.

Also boosting sentiment was the decision of the Organization of Petroleum Exporting Countries to lift its medium to long term demand forecasts, saying on Monday in its 2022 World Oil Outlook that demand will be higher than initially expected in the medium to long term, and will likely plateau by only 2045.

By 04:30 ET, futures traded 1.5% higher at $87.80 a barrel, while the contract rose 1.5% to $94.22. Both benchmarks fell over 1% on Monday. 

Additionally, rose 0.6% to $1,650.10/oz, while traded 0.5% higher at 0.9932.