By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets slid on Tuesday,
with investors cautious of placing any new positions ahead of the
release of minutes from the latest U.S. Federal Reserve
meeting.
The Stoxx Europe 600 index dropped 0.8% to 302.25, marking the
lowest closing level in August.
"The market is certainly drifting lower and there's no real
appetite to take on a great deal of risk ahead of the Fed meeting
minutes tomorrow," said Richard Perry, chief market strategist at
Central Markets.
"It's difficult to know what the market is looking for. We had a
pretty sizable selloff last Thursday on the strong jobs report.
[...] Anything that suggests that tapering will take off soon will
hit the markets," he added.
Among notable decliners in Tuesday's trade, shares of BHP
Billiton PLC (BHP) fell 1.7% after the mining heavyweight said net
profit slumped 30% to $10.88 billion in the fiscal year ended June,
while revenue dropped 8.7% to $65.97 billion.
Glencore Xstrata PLC (GLCNF) dropped 1.6% after the commodities
firm recorded an impairment charge of $8.47 billion of its assets,
contributing to a net loss in the first half of the year. A large
part was due to a $7.66 billion write-down related to the
acquisition of Xstrata, which closed in May.
On a more upbeat note, GSW Immobilien AG jumped 6.3% after
Deutsche Wohnen AG launched an all-share bid for the German
property group. As part of the deal, Deutsche Wohnen offered 51 new
shares for 20 GSW shares. Deutsche Wohnen shares dropped 4.7%.
Fed tapering in focus
Markets added to losses from Monday, ahead of the minutes from
the July meeting of the U.S. Federal Open Market Committee due on
Wednesday. Investors are speculating the Fed could start reducing
its $85-billion-a-month asset purchases as soon as September, and
the minutes could shed more light on the central bankers' view of
the tapering process.
Worries that the Fed will scale back its easing program have
sent U.S. Treasury yields rallying in recent days, with the yield
on the 10-year note (10_YEAR) closing at its highest level since
July 2011 on Monday.
Shavaz Dhalla, financial trader at Spreadex, said in a note,
that traders will "be meticulously dissecting the minutes" to gauge
if recent strong data have strengthened the case for the Fed to
taper its stimulus measures.
"However, perhaps more pragmatic investors would argue that if
the markets did receive a confirmation of tapering by U.S.
officials, then much of this has already been priced in. In fact,
some bulls have even pointed out that the selloff could be good in
the short term as it gives bargain hunters an opportunity in the
long term," he added.
U.S. stocks traded mostly higher on Tuesday.
Europe movers
Among country-specific indexes in Europe, Germany's DAX 30 index
fell 0.8% to 8,300.03, and France's CAC 40 index dropped 1.4% to
4,028.93. The U.K.'s FTSE 100 index lost 0.2% to 6,453.46.
Morgan Stanley downgraded steelmakers Salzgitter AG and
ArcelorMittal to underweight from equal weight. Shares of
Salzgitter slipped 3.8% in Frankfurt and ArcelorMittal fell 3.1% in
Amsterdam.
In London, shares of John Wood Group PLC slid 8% after the
oil-services firm lowered the earnings outlook for its engineering
unit, giving a growth range of 10% to 15%, compared with its
previous estimate of 15%.
On a more upbeat note, shares of Novartis AG (NVS) climbed 1.4%
after the drug maker said the U.S. Food and Drug Administration
granted "breakthrough" status to its potential treatment of
patients with sporadic inclusion body myositis.
Ladbrokes PLC gained 3.1% after Deutsche Bank lifted the online
betting firm to buy from hold.
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