UPDATE 2-Retail rally helps European stocks ahead of Fed

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* Inditex jumps after results, boosts retailers
* Stronger pound hurts UK's FTSE 100
* Fed policy statement due at 1800 GMT

(Updates to market close)
By Sruthi Shankar
Sept 16 (Reuters) - Retail stocks surged after strong
results from Zara-owner Inditex on Wednesday, but it was a mixed
session for the wider European market, with Britain's
exporter-heavy FTSE 100 hit by a stronger pound.
Investors were waiting to hear from the U.S. Federal
Reserve, which is expected to wrap up its latest policy meeting
with somewhat rosier economic forecasts but a renewed pledge to
keep interest rates low for as long as the U.S. needs to recover
from a pandemic-induced recession. The policy announcement is due at 1800 GMT, and Fed Chair
Jerome Powell is due to hold a virtual news briefing half an
hour later.
The pan-European STOXX 600 index .STOXX closed up 0.6%,
gaining for the fourth straight session, while Britain's main
FTSE 100 .FTSE fell 0.4% and the euro zone's blue-chip index
.STOXX50E gained 0.2%.
"Whatever the Fed says, the reality is that there is more
monetary stimulus coming anyway," said Edmund Shing, global head
of equity derivative strategy at BNP Paribas. "It doesn't change
that longer-term narrative for equities which I think is the
real driver."
Spain's Inditex ITX.MC was a star performer after it said
current trade showed a progressive return to normality, with
online sales growing sharply and store sales recovering. Its
shares jumped 8.1%, while the broader retail sector .SXRP rose
1.3%. Madrid-listed stocks .IBEX jumped 1%, also getting a boost
from news that Caixabank CABK.MC and Bankia BKIA.MC are set
to approve a deal on Thursday that will create Spain's biggest
domestic lender. The banks' shares rose 1.3% and 4.3%,
respectively. Despite a subdued session in UK markets, shares in
e-commerce firm The Hut Group THG.L surged 25% in the first
major British initial public offering in seven years.
Signs of compromise emerged on the Brexit front, with
Reuters reporting that Britain offered tentative concessions on
fisheries in trade talks with the European Union last week, just
as London was threatening to breach the terms of its divorce
deal with the bloc. German logistics group Deutsche Post AG DPWGn.DE rose 1.9%
and Britain's Royal Mail RMG.L gained 5.3% after strong
earnings from U.S. delivery firm FedEx Corp FDX.N .
Sweden's Handelsbanken SHBa.ST rose 2.4% after revealing
plans to close almost half of its branches and cut about 1,000
jobs over the next two years.