- Federal Reserve begins policy meeting
- US inflation rises less than forecast
- German sentiment improves
- UK consumer prices grows at slower pace
FTSE 100: -0.63%
CAC 40: -0.12%
FTSE MIB: 0.10%
IBEX 35: -0.05%
Stoxx 600: -0.41%
European equities finished mixed on Tuesday as the Federal Reserve kicked off its two-day policy meeting.
The Fed will announce its latest stimulus measures and interest rate decision when the meeting wraps up on Wednesday.
The central bank is expected to reduce its main rate to 0.25% from 0.3% and cut its monthly asset purchases from $85bn to $70bn, according to Barclays Research.
"The only way dealers will be surprised is if the trim is more or less than $10bn," IG said in a note to investors on Tuesday.
Acting as a backdrop for the meeting, a Labor Department report showed consumer prices rose less than forecast in August. The consumer price index increased 0.1%, the least in three months, after a 0.2% advance in July.
Policymakers have said they watching prices to ensure US doesn't slip into a long period of weakening increases which is said to stifle growth.
Meanwhile, investors have reacted positively to rumours that current Vice Fed Chair Janet Yellen will take over from Ben Bernanke as the new Fed Chairman after Lawrence Summers dropped out from consideration.
Yellen is anticipated to back a slow tapering of quantitative easing.
"Summers, a former Treasury secretary, would have tightened central bank policy more than Fed Vice Chairman Janet Yellen, said Spreadex trader Max Cohen.
"With the more dovish Yellen, we can expect to see less volatility than what economists expected with the appointment of Summers. Consequently, the dollar
sunk near a four-week low."
UK inflation, German investor sentiment
UK inflation grew at a slower pace in August compared to the previous month, the Office for National Statistics (ONS) revealed on Tuesday. The Consumer Price Index (CPI), the headline measure of inflation, rose by 2.7% on the year, down from 2.8% in July, and in line with market expectations.
Economic expectations for Germany increased 'considerably' in September, according to the ZEW indicator published on Tuesday. The ZEW indicator of investor sentiment for Europe's biggest economy jumped 7.6 points in September to 49.6, beating the consensus estimate of 46.
"The financial market experts hold the view that the German economy is still gaining momentum," ZEW President Clemens Fuest explained.
UK government sells Lloyds stake
Lloyds slumped after the UK government sold a £3.2bn stake in the lender.
A gauge of carmakers fell, including Volkswagen and PSA Peugeot Citroen, after a report showed European car sales dropped 4.9% in August.
Debenhams rose after the UK retailer said like-for-like sales rose 0.8% in the 26 weeks to August 31st, beating estimates for a 0.5% increase.
Galp Energia tumbled as terms obtained by Bloomberg News showed Citigroup is representing an undisclosed investor in offering 3.5m shares
in the Portuguese utility for €12.25 each.
Glencore Xstrata fell as UBS lowered its rating on the miner from 'buy' to 'neutral'.
Continental plunged after Schaeffler AG and Schaeffler Verwaltungs GmbH sold a combined stake of about 4% in in European car-parts maker.
Brent crude oil
Brent crude futures dipped $1.653 to $108.280 per barrel on the ICE.
Gold declined for the fifth time in six sessions as Goldman Sachs Group Inc. said the retreat had further to go.
The euro rose 0.15% to the 1.3354 US dollar.