LONDON, March 20 European stocks fell in early deals on Thursday, led lower by growth-sensitive stocks after the U.S. Federal Reserve indicated it may raise interest rates much earlier than expected.
Fed Chair Janet Yellen sent U.S. stocks and bonds tumbling overnight after she suggested they could rise by mid-2015, a potentially more aggressive path than many had anticipated.
Yellen also said the central bank could end its bond-buying programme this autumn. The Fed's easy policy stance of low rates and asset purchases has pushed many investors into equities.
"Whether she intended to be taken so literally is open to debate but it was enough to prompt a sharp reversal (in U.S. stocks), and as such we can expect to see a lower open in Europe this morning," Michael Hewson, chief market analyst at CMC Markets, wrote in a note.
The pan-European FTSEurofirst 300 fell 0.5 percent to 1,298.71 by 0805 GMT, having held roughly steady on Wednesday.
Sectors which depend on global demand were the top fallers, with the STOXX Europe 600 Chemical sector index and the STOXX Europe 600 travel & leisure index down 0.9 percent and 0.8 percent respectively. (Reporting by Alistair Smout; editing by Simon Jessop and Francesco Canepa)