By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets moved cautiously higher on Wednesday as investors waited for a policy decision from the U.S. Federal Reserve, while U.K. stocks outperformed after Bank of England minutes showed a unanimous vote in favor of keeping rates at a record low.

The Stoxx Europe 600 index rose 0.1% to 346.73, adding to a 0.3% gain from Tuesday.

Helping lift the index, shares of Royal Dutch Shell PLC (RDSB) picked up 2.2% after the oil giant confirmed it has completed the sale of 78 million shares of Woodside Petroleum Ltd. . Shares of Woodside dropped 4.6%. Oil prices were also higher amid sectarian in violence in Iraq that could disrupt the country's oil supply. On Wednesday, Iraq's largest oil refinery was attacked and partially seized by Sunni militants using machine guns and mortars, according to media reports.

Voestalpine AG gained 2.3% after Citigroup lifted the steel maker to buy from neutral. The analysts said the company's long-term re-rating story "remains under-appreciated by the market."

Shares of Hennes & Mauritz AB (HNNMY) advanced 0.4% after the Swedish fashion retailer reported a 25% rise in second-quarter profit and said it plans to add up to 10 new online markets.

More broadly, investors waited for the U.S. Fed to conclude its two-day meeting in Washington. The central bank is widely expected to slash another $10 billion from its quantitative-easing program, bringing the monthly amount of asset purchases down to $35 billion. If the Fed sticks at that pace, its easing could end in October with a final cut of $15 billion, analysts at HSBC have noted. Read: What brokerages are saying about the FOMC meeting on Wednesday

Market observers will also be scrutinizing updated economic projections from the Federal Open Market Committee and the "dots" that reflect the individual members' view on the rate path. Read: Markets to Fed: Give us the 'dot plot' and go home

U.S. stock futures were slightly higher ahead of the meeting.

Among European benchmarks, the U.K.'s FTSE 100 index gained 0.4% to 6,794.12 after the minutes from BOE's monetary-policy decision earlier in June showed all nine members of the Monetary Policy Committee voted in favor of leaving the key interest rate at a record low of 0.5% and making no changes to its 375 billion pound ($636 billion) asset-purchase program.

After BOE Governor Mark Carney last week said rates could rise sooner than markets currently expect, speculation grew that one or two members would have voted in favor of tightening policy.

"After some deliberation, markets decided that the minutes were not quite the signpost towards higher rates that they had expected," Philip Shaw, chief economist at Investec Securities said in a note. "Our reading of the yield curve is now that the first hike is almost fully priced in by this December, having previously been November."

However, with four MPC members speaking in coming days, expectations could shift again, Shaw noted.

The pound (GBPUSD) pulled back after the minutes, trading at $1.6933, down from $1.6966 ahead of the release.

Elsewhere, Germany's DAX 30 index climbed 0.2% to 9,938.12, while France's CAC 40 index rose 0.1% to 4,539.67.

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