Markets stuck to tight ranges on Wednesday during the final countdown to a widely-expected hike in Federal Reserve interest rates, with outlier crude oil jumping on the prospect of a European oil embargo on Russia.

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Wall Street was headed for a steady start with stock index futures slightly firmer ahead of the open, helped by positive earnings updates from Advanced Micro Devices, which rose 6% pre-market after forecasting stronger than expected full year revenue.

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The 10-year U.S. Treasury yield was just below the closely watched 3% level, while oil prices bounced as the EU proposed more sanctions on Russia in response to its invasion of Ukraine, including an oil embargo to be phased in by year-end.

Markets expect the Fed to raise rates by half a percentage point at 1800 GMT - the most in a single day since 2000 - to curb inflation, and to detail plans to reduce its $8.9 trillion balance sheet.

Fed Chair Jerome Powell holds a news conference after the announcement.

"The bigger question is what will the Fed`s guidance be for rate hikes next month. Will we get another 50 basis points in June, and what`s the timeline for balance sheet reduction?" said Michael Hewson, chief markets analyst at CMC Markets.

The dollar was little changed around 20-year highs, having already priced in a Fed hike and some 250 basis points in increases by year-end in a bid to get ahead of inflation.

"If the Fed provides an indication they will aggressively front-load the tightening cycle and the back end of the Treasury curve comes off a bit, that will be the indication that markets are starting to price the Fed getting ahead of the curve," said ING Bank strategist Francesco Pesole.

The MSCI global stocks index was down 0.1%, while the STOXX index of European companies eased 0.4%.

The global monetary tightening cycle has reached a symbolic milestone, with yields on German, British and U.S. 10-year government debt topping 1%, 2% and 3% respectively, levels not seen in years. That has in turn raised borrowing costs for businesses and households.

The Bank of England is expected to lift UK interest rates on Thursday by a quarter of a percentage point, which would be its fourth hike in a row to quell surging prices.

EMBARGO BOOSTS CRUDE

Many Chinese and Japanese stock markets were closed overnight, offering little direction for European investors.

Crude oil prices gained as the EU gave details of its planned phased Russian oil embargo and other new sanctions targeting Russia`s top lender Sberbank and Russian broadcasters, which would be blocked from European airwaves.

The oil embargo offset demand worries in top importer China.

But Caroline Bain, chief commodities economist at Capital Economics, said the big picture was clearly negative for commodities over the year as rising inflation and higher interest rates bear down on spending.

Brent crude futures were up 4% at $109.10 a barrel. West Texas Intermediate crude futures gained 4.1% to $106.70.

The Aussie dollar gained as much as 1.3%, and local shares fell, after the Australian central bank`s bigger-than-expected 25 basis point rate increase on Tuesday.

The yield on 10-year U.S. Treasury notes was flat at 2.9539%, after breaching the key milestone of 3% for the first time since December 2018 on Monday.

The dollar index, the euro and gold were little changed, with bitcoin gaining 3.4% to $39,010.