* FTSEurofirst 300 and Euro STOXX up over 1 pct
* InBev takeover approach sends SABMiller up 20 pct
* Fed begins two-day rate setting meeting on Wednesday
* Strong Richemont results lift luxury good stocks
By Danilo Masoni
MILAN, Sept 16 (Reuters) - European shares were higher for a second session on Wednesday, with M&A hopes sending SABMiller and InBev sharply higher, while investors remained cautious ahead of the Federal Reserve's interest rate decision.
The pan-European FTSEurofirst 300 index rose 1.26 percent while the euro zone's blue-chip Euro STOXX 50 index was up 1.06 percent.
SABMiller rose more than 20 percent to a six-month high after the brewing company said rival InBev intended to make an acquisition proposal in a deal that would create a brewing colossus.
InBev, the world's largest brewer, said there was no certainty the approach would result in an offer or an agreement with the No. 2 player. InBev shares rose more than 7 percent.
Cartier owner Richemont rose 6.5 percent after beating sales growth forecasts, helped by continued spending by wealthy Chinese travellers. Other luxury good stocks were higher, while Zara clothes retailer Inditex was up 4.7 percent after reporting higher sales.
Shares in Zodiac slumped 20 percent after the French aircraft cabin and systems maker warned that delays to its production of aircraft seats would hit profits.
The rise in European shares comes as Wall Street opened flat and follows gains in Asia on Wednesday. Short-term U.S. bond yields held near 4-1/2 year highs as investors braced for the possibility of the first U.S. interest rate hike since 2006.
Money market traders clung to their view on Wednesday the Federal Reserve will unlikely raise interest rates at its upcoming policy meeting after the latest government data showed domestic inflation remains tame.
"If, as we believe, the Fed does not hike this week, there will still be a modest market reaction, gently positive for global equity," said AXA Group Chief Economist Eric Chaney.
The Fed begins its meeting on Wednesday and will announce its decision on Thursday.
The FTSEurofirst has risen nearly 10 percent from a low last month. Yet it also remains down by a similar amount from its peak two months ago, due to concerns about the impact to markets if the Fed does raise rates and worries over a China slowdown.
Hantec Markets' analyst Richard Perry said equity traders would be looking to the bond and foreign exchange markets for direction, and added that any strength in the U.S. dollar could be good for European shares as it would help European exporters.
The European Central Bank's economic stimulus measures would provide further support for European stocks, added traders, with the FTSEurofirst still up 4 percent since the start of 2015.
Today's European research round-up
Europe bourses in 2015: link.reuters.com/pap87v
Asset performance in 2015: link.reuters.com/gap87v (Additional reporting by Sudip Kar-Gupta in London; Editing by Dominic Evans)