* Firmer oil prices lift shares of energy companies
* Brenntag rises after forecasting more growth
* Bilfinger slumps after scrapping dividend
* Deutsche Bank, UBS lead declines among banks (Adds details, updates prices)
By Sudip Kar-Gupta and Danilo Masoni
LONDON/MILAN, March 16 (Reuters) - European stocks gave up earlier gains on Wednesday after a report showed U.S. inflation rose more than expected last month, with a rise in the shares of energy and auto companies limiting the fall.
The pan-European FTSEurofirst 300 index fell 0.4 percent to 1,336 points at 1315 GMT. The euro zone's blue-chip Euro STOXX 50 index dropped by 0.5 percent.
Underlying inflation in the United States rose more in February than expected, data showed on Wednesday, bolstering the case for higher interest rates a few hours before the Federal Reserve's announces its policy decision.
"It is unlikely that we'll get a move tonight, but I am definitely looking for a hawkish lean from the Fed with supportive data like CPI at 2.2 percent," said John Hardy, head of Saxo Bank's forex strategy. "There is two-way risk tonight and there could be a lot of volatility in and around the decision."
The U.S. central bank, which raised rates in December for the first time in nearly a decade, sounded a cautious note at its last policy meeting in January, amid a sell-off on financial markets, weaker oil prices and falling inflation expectations.
The Fed's latest policy statement, due at 1800 GMT along with updated economic projections, will show how comfortable policymakers are with the gradual rate increases they projected late last year.
Shares in oil companies such as BP and Eni advanced as oil prices climbed. Tullow Oil got a further boost from a Kenya oil discovery .
Banks fell the most, dropping 1.9 percent. Deutsche Bank and UBS both lost ground after downbeat comments from their chief executives .
Deutsche Boerse shares rose 0.7 percent after more details of its proposed merger with the London Stock Exchange were announced.
Chemicals distributor Brenntag surged 7.3 percent after the company forecast more growth in 2016. Engineering services group Bilfinger slumped after scrapping its dividend.
Auto stocks gained the most, rising 1.5 percent.
UBS strategists advocated selling into market rallies to cash in some profits, given the threat of of a China-led global economic slowdown.
Today's European research round-up (Editing by Larry King)