European shares fall on prospects of Fed stimulus cut

Wed Aug 7, 2013 3:36am EDT

* FTSEurofirst 300 down 0.5 pct, Euro STOXX 50 down 0.4 pct

* Possible imminent cut in U.S. stimulus saps appetite for shares

* Randgold weighs as falling gold price hits profits

By Francesco Canepa

LONDON, Aug 7 (Reuters) - European stocks fell on Wednesday after comments from U.S. Federal Reserve officials raised the prospect of an imminent cut in the bank's equity-friendly stimulus programme.

Chicago Fed President Charles Evans, typically among the most dovish policymakers, said the central bank will probably trim its quantitative easing (QE) programme later this year and could do so as early as next month, depending on economic data.

"Now we think that the market clearly understands that (QE)tapering is going to happen," said Franz Wenzel, a strategist at AXA Investment Managers, who expects U.S. economic data to continue to improve and the Fed to start reducing its bond purchases in September.

"Most of that is presumably priced in but once the data and the tapering hit the screen there might be a little more volatility."

The Fed's QE programme and similar central bank schemes across the world have hit bond yields and led investors to seek higher returns in share markets, helping the Euro STOXX 50 index rise around 15 percent since September 2012.

The index fell 0.4 percent to 2,780.16 at 0723 GMT, slipping further from a two-month high of 2,821.39 hit last week.

Daily charts showed the index had been making higher highs and lower lows since February, a pattern known as a "broadening formation".

"For this reason, prices should temporarily attempt to push above this year's high (at 2,851)." Philippe Delabarre, an analyst at Paris-based technical analysis firm Trading Central, said.

The pan-European FTSEurofirst 300 was down 5.91 points, or 0.5 percent, at 1,214.93 points.

Basic materials shares took 0.9 points off the FTSEurofirst 300, weighed down by Randgold Resources.

Shares in the Africa-focused miner fell 3.6 percent after it posted a 62 percent drop in quarterly profit, hit by the plunging gold price and echoing a weak update by peer Fresnillo the previous day.

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