* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 up 0.2 pct
* All eyes on U.S. Federal Reserve's policy meeting
* H&M rises after upbeat sales comments
By Blaise Robinson
PARIS, June 18 European shares edged up in early trade on Wednesday but gains were capped as investors awaited the end of the U.S. Federal Reserve's two-day policy meeting.
The Fed is widely expected to cut another $10 billion from its monthly bond purchases, while investors will be watching for any comments on when the Fed will begin to raise interest rates and its outlook for the economy.
Data released on Tuesday showed a surprisingly high reading for U.S. inflation, which sparked speculation about a hawkish tilt to the Fed's policy outlook.
"I don't think the Fed will be too alarmed by yesterday's number. It's just a signal that perhaps under the surface things are changing, in a positive way," said Kenneth Broux, a strategist at Societe Generale.
"If there is a potential change (in the Fed statement) it will be about the labour market, which has done really well."
At 0750 GMT, the FTSEurofirst 300 index of top European shares was up 0.2 percent at 1,389.40 points, less than 1 percent below a 6-1/2 year high hit last week.
The euro zone's blue-chip Euro STOXX 50 index was up 0.2 percent at 3,280.37 points.
Investors were also reluctant to chase stocks higher as violence in Iraq continued, keeping Brent crude prices above $113 per barrel.
Heavy fighting shut the country's biggest refinery and led to the withdrawal of staff by foreign oil firms, fearing Islamic militants from the north could strike at major oilfields concentrated in the south despite moves by the Iraqi government to tighten security.
Shares in Hennes & Mauritz rose 0.7 percent after the world's second-biggest fashion retailer said sales in June had got off to a good start and reported second-quarter profits in line with analyst forecasts.
Shares in Spanish rival Inditex, the owner of the Zara brand, added 0.5 percent.
Shares in Rheinmetall added 3.2 percent after a newspaper reported that the German defence group was set to sign a deal to make 980 Fuchs 2 military vehicles for Algeria.
Handelsblatt daily said on Wednesday that Rheinmetall would sign the 2.7 billion euro ($3.7 billion) contract in the coming weeks, without citing sources.
Shares in French biotech Cellectis jumped 55 percent after the company said it had signed a deal with U.S. drugmaker Pfizer to develop immunotherapy drugs in cancer.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Francesco Canepa in London and Harro Ten Wolde in Frankfurt; Editing by Gareth Jones)