European equities were little changed yesterday in cautious deals before a vital US Federal Reserve interest rate call while Paris moved higher on news ofa blockbuster Franco-US-Italian car merger.

Frankfurt fell and London edged higher as sentiment was also clouded by US-China trade talk concerns, but Paris found support after auto giants Fiat Chrysler and Peugeot-maker Groupe PSA announced talks for a $50-billion (45-billion-euro) mega merger.

The British pound extended gains one day after UK lawmakers voted to hold a general election in December as Prime Minister Boris Johnson seeks to break the Brexit deadlock.

In Paris, shares in Groupe PSA  – the maker of Peugeot and Citroen cars – rallied 5.4 per cent to 26.26 euros while in Milan Fiat Chrysler Automobiles (FCA) surged 10 per cent to 12.92 euros.

A merger would bring PSA access to the lucrative US market, while helping it survive the twin impact of the global economic slowdown and trade war worries, analysts said.

The tie-up would make the new automaker the fourth largest in terms of sales behind Volkswagen, Renault-Nissan-Mitsubishi and Toyota, and would combine a host of well-known brands from Alfa Romeo, Jeep and Dodge to Citroen, Opel and Peugeot.

Asian stocks slipped yesterday as traders waited for the Fed decision, confident of another rate cut but focused on its plans for the future.

Wall Street opened marginally higher, with all three main indices advancing less than 0.1 per cent in the first minute of trading.