European markets are set to open lower on Wednesday, as investors react to historic policy reforms in Germany and developments in the ceasefire in Ukraine, and await a key monetary policy update.

London's FTSE 100 is expected to be little changed at the open, according to IG, while France's CAC 40 is forecast to drop 0.2% and Germany's DAX is scheduled to open about 0.5% lower.

That comes after German lawmakers voted on Tuesday to reform the country's so-called debt restraint rules, which would allow for greater national spending on defense and authorize the creation of a 500 billion euro ($546 billion) climate and infrastructure fund.

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A decline in the DAX — home to Germany's largest companies — would end a three-day winning streak for the index, which has gained 17.4% since the start of the year.

European markets closed higher on Tuesday following a German debt reform vote.

Traders also reacted to news that U.S. President Donald Trump and Russian leader Vladimir Putin agreed on Tuesday to take steps toward a ceasefire in Ukraine.

Global investors are also awaiting the latest monetary policy updates from the U.S. Federal Reserve and the Bank of England.

The Fed is not expected to make any changes to its key interest rate when it meets on Wednesday.

The Bank of England, whose Monetary Policy Committee meets on Thursday, is also expected to keep its key interest rate unchanged at 4.5%, amid signs of a slowdown in the U.K. economy.

Across the Atlantic, stock futures were slightly higher on Wednesday morning as traders awaited an update from the Fed. That came after U.S. stocks suffered a broad selloff in Tuesday's trading session.

Overnight in Asia, markets were mixed following a selloff on Wall Street on Tuesday.(Newsmaker23)

Source: CNBC