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Investors Watch Closely as Republicans Prepare Tax Reform Plans

European stocks rise as U.S. tax reform optimism & merger activity boosts sentiment.

This is what you need to know on Wednesday:

1. European stocks edge higher Wednesday as global markets get a boost from some early steps towards tax reform in the United States but remain cautious owing to rising political risks on the Continent.

2. Europe's biggest transportation merger looks to have the early blessing of investors, with shares in Germany's Siemens AG (SIEGY)  and France's Alstom SA (ALSMY)  surging at the opening bell after agreeing to combine their rail divisions in a €7.4 billion deal designed to see-off competition from China.

3. The dollar index, which measures the greenback's strength against a basket of six global currencies, added 0.16% overnight to trade at a one-month high of 93.12 after Federal Reserve Chairwoman Janet Yellen reiterated the central bank's aim for gradual rate hikes and Congressional Republican lawmakers set out plans to detail a tax reform bill that be revealed as early as today.

4. A surprise drop in U.S. crude stocks saw global oil prices extend gains.

5. Early indications from Wall Street suggest the three major indices will edge higher at the start of trading, with Dow Jones and S&P 500 mini futures indicating 1 point gains.

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