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UPDATE 1-European stocks skid from 1-month high as Fed underwhelms

17 Sep 2020 / 16:15 H.

    (For a live blog on European stocks, type LIVE/ in an Eikon news window)

    * UK banks slide ahead of BoE decision

    * Tech stocks sold off across regional markets

    * UK's Next adds to string of upbeat retailer earnings (Adds comment, updates prices)

    By Sruthi Shankar

    Sept 17 (Reuters) - European stocks fell from a one-month closing high on Thursday after an underwhelming response to the U.S. Federal Reserve's pledge to keep interest rates low for a prolonged period.

    The pan-European STOXX 600 dropped 0.9%, on course to break its four-day winning streak.

    The U.S. central bank on Wednesday vowed to keep interest rates near zero until inflation is on track to overshoot the 2% target. However, Fed Chair Jerome Powell said an economic recovery is expected to slow, requiring continued support from further government spending.

    Tech stocks fell the most overnight on Wall Street, while their European peers shed 1.5%. Banks and miners were the biggest sectoral decliners in Europe, down nearly 2.3% and 1.7%, respectively.

    "Those who were expecting more input from Fed monetary policy after the adoption of an average-inflation target regime remained disappointed," UniCredit analysts wrote in a note.

    "While the Fed expects the fed funds rate to remain flat through 2023, it will need more time to assess the status of the economy and to change its remaining tools accordingly."

    All eyes are on the Bank of England's monetary policy decision, due at 1200 GMT. With Britain's economy heading for a jump in unemployment and a possible Brexit shock, the central bank is expected to signal that it is getting ready to pump yet more stimulus.

    Interest-rate sensitive banking stocks such as HSBC , Barclays and Standard Chartered fell nearly 3%.

    Carmakers Volkswagen, Renault and PSA Group slipped after industry data showed new car sales fell by 17.6% in August, with new registrations falling sharply in Germany and France.

    Property firm Unibail-Rodamco-Westfield slumped 8.8% to the bottom of the STOXX 600 as it announced a turnaround plan that includes a 3.5 billion euros ($4.12 billion) rights issue to boost its balance sheet.

    Britain's Next rose 0.9% after it raised its profit outlook for the second time in two months, becoming the latest retailer to report strong results this week.

    Despite Thursday's declines, encouraging updates from fashion retailers, a slate of M&A activity and hopes of a coronavirus vaccine kept the STOXX 600 on course for weekly gains.

    Delivery Hero rose 1.4% after the food delivery group said it would buy the Latin American operations of Glovo for up to 230 million euros. (Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva)

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