The pan-European STOXX 600 <.STOXX> index was up 0.4 percent at its close, with the market focussed on potentially divisive elections in the Netherlands and a U.S. Federal Reserve policy meeting that could signal how much monetary tightening to expect during the remainder of the year.

A recovery in oil prices after a surprise U.S. crude stockpile drawdown eased worries about a supply glut and spurred a rally in basic resources stocks with the sector <.SXPP> up 1.7 percent, followed by major European oil-related stocks <.SXEP> which rose 1.2 percent.

Outokumpu (>> Outokumpu Oyj) and Glencore (>> Glencore PLC) were among the top gainers, with their shares up 7.3 percent and 2.9 percent respectively. Outokumpu's shares jumped after the European benchmark price for ferrochrome, a crucial raw material for steel production, was set lower than expected. .

Bank stocks <.SX7P> also lent support, gaining 0.9 percent ahead of an expected U.S. interest rate hike. Higher interest rates benefit banks' margins, which have struggled in Europe's low rate environment.

"It’s almost certain we will see an increase in interest rates from the Federal Reserve tomorrow. The question now is not if they will increase, but by how much," Jordan Hiscott, chief trader at ayondo markets, said in a note.

"Going forward, with (a) possible three rate increases for 2017 alone, I predict we will see trepidation for the equity markets in general.”

British drugmaker Hikma (>> Hikma Pharmaceuticals Plc) was the biggest STOXX gainer, jumping 8 percent after it posted a 2.4 percent rise in full-year operating profit on growth in its injectables and branded business, which offset weakness in its generic drugs.

Zodiac (>> Zodiac Aerospace) was the biggest European faller, after it warned on profit after the close on Tuesday. The company, which engine maker Safran (>> SAFRAN) is seeking to acquire, said it sees full-year operating income falling 10 percent against a previous forecast of a 10-20 percent rise.

Swedish fashion retailer H&M (>> H & M Hennes & Mauritz AB) was also among the biggest fallers, with its shares down more than 5 percent after it posted its first monthly sales drop in four years.

The Europe-wide retail sector index <.SXRP> was the worst-performing, down 0.3 percent, with Zara owner Inditex's (>> Inditex SA) shares roughly flat after releasing full-year earnings.

German utility E.ON < EONGn.DE> fell 3.5 percent after it posted a record 16 billion euro (14 billion pounds) loss due to impairments on its former power plant unit Uniper (>> Uniper SE) which it spun off last year.

(Reporting by Helen Reid and Kit Rees; Editing by Toby Davis)

By Helen Reid and Kit Rees