European shares extended gains in early trading on Wednesday, with Telecom Italia leading the market higher after a Reuters report saying Vivendi plans to increase its stake in the company.

Telecom Italia shares rose 3.9 per cent after the report, citing people familiar with the matter, said Vivendi was looking to increase its stake in the Italian company to between 10 and 15 per cent.

The proposal is still under discussion internally and would need to be ratified by the Vivendi board. Vivendi and Telecom Italia declined to comment.

The broader stock market was also helped by a 8.7 per cent jump in Remy Cointreau after the drinks maker said it will hand investors a hefty dividend hike as its annual operating profit grew 13.5 per cent.

The STOXX Europe 600 index rose 0.2 per cent, while the FTSEurofirst 300 index of top European shares was up 0.3 per cent at 1,533.07 points by 0712 GMT. The FTSEurofirst index closed 0.6 per cent higher in the previous session after hitting a four-month low.

Investors stayed cautious ahead of a US Federal Reserve meeting. The Fed statement is due at 1800 GMT, followed by Chair Janet Yellen’s news conference half-an-hour later where analysts expect that she will focus on signs the economy is recovering after a bumpy start to the year. The statement will be scrutinised for hints about the timing of a US rate hike.

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