FTSE 100 closes higher, leading European markets as UK inflation rate cools

European stocks finished broadly higher on Wednesday as investors gear up for central bank decisions.

The pan-European Stoxx 600 closed the session just above the flatline, with sectors mixed and most major bourses in positive territory.

London's FTSE 100 led regional gains with a jump of 0.9%. It came after inflation data published Wednesday showed that the U.K. inflation rate cooled to 3.2% in November, down from 3.6% a month earlier.

The index was lifted higher by financial services and homebuilder stocks, which reacted positively to the November inflation figures and the prospect of an interest rate cut from the Bank of England this week.

The BOE's nine-member monetary policy committee is expected to trim interest rates by 25 basis points to 3.75%, given a backdrop of lackluster growth and signs that unemployment could be ticking higher.

Homebuilder Barratt Redrow gained 3.7%, topping the FTSE 100, while retirement savings firm Phoenix Group finished the session 3.3% higher.

The British pound fell in the aftermath of the inflation print, and was last seen trading around 0.2% lower against the U.S. dollar.