By Pranav Kashyap
(Reuters) -European shares were muted on Tuesday as investors exercised caution ahead of the Federal Reserve's monetary policy meeting and Euro zone inflation data, but gains in technology and oil stocks keep the benchmark afloat.
The pan-European STOXX 600 index was up 0.1% at 512.44 points by 0830 GMT.
The technology sector rose 0.1% ahead of earnings reports from tech giant Microsoft (NASDAQ:MSFT) and chipmaker AMD (NASDAQ:AMD) later on Tuesday.
Globally, tech shares are under pressure after disappointing results from Tesla (NASDAQ:TSLA) and Alphabet (NASDAQ:GOOGL) last week.
"Strong results may not spark the same enthusiasm than in the previous quarters if companies don't confirm AI's positive impact on their revenues," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
Among other major events, the Fed is set to begin its two-day policy meeting later in the day, with investors anticipating a rate cut as early as September.
"The Fed decision will certainly trigger no fireworks as Chair Jerome Powell will likely hint at an upcoming September rate cut," Ozkardeskaya added.
Eurozone preliminary GDP and consumer confidence data are also due later on Tuesday, along with a slew of inflation readings. Data from Germany showed that the economy unexpectedly shrank by 0.1% in the second quarter compared to forecasts of a 0.1% increase.
The German benchmark DAX ticked slightly lower to 0.2% after the data.
Among individual stocks, spirits maker Diageo (LON:DGE) was the biggest weight on the STOXX 600 index, falling 10% after it reported a 4.8% decline in annual profit, falling short of analyst expectations.
The stock dragged the food and beverages sector down 1.2%.
Basic resources fell 1.4% as base metals prices slipped due to slowing global growth momentum and risk-off sentiment, with aluminium and zinc hitting three-month lows. [MET/L]
On the flip side, BP (LON:BP) gained 2.1% after the oil giant reported beat market expectations, while increasing its dividend and extending its share repurchasing programme. The company's update boosted the oil sector by 0.7%.
Standard Chartered (LON:STAN) jumped 5.7% after the bank announced its largest share buyback of $1.5 billion and raised its annual earnings forecast.
St James's Place soared 20.6% as the British wealth manager said it plans to cut tens of millions of pounds of costs.