By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets staged
broad-based losses on Wednesday, tracking both U.S. and Asian
stocks lower, after Federal Reserve officials said a reduction in
asset purchases is likely later this year.
U.K. stocks also came under increased pressure after the Bank of
England delivered a framework on forward guidance as expected.
The Stoxx Europe 600 index lost 0.2% to 302.72, after snapping a
six-day winning streak on Tuesday. It pared back on earlier losses
though.
Shares of TUI Travel PLC slid 5% in London after the travel
agency reported an operating loss for the nine-month period to June
30.
Shares of Randgold Resources Ltd. (GOLD) shaved off 2.6% after
the gold miner reported second-quarter profit below expectations.
Other miners were also lower as most metals prices declined.
Heavyweight Rio Tinto PLC (RIO) dropped 1.7% and BHP Billiton PLC
(BHP) fell 1%.
On a more upbeat note, shares of Old Mutual PLC jumped 3.5%
after the insurance firm reported a rise in first-half pretax
profit and funds under management.
The broader European stock markets mirrored losses seen in the
U.S. the prior day and overnight in Asia on concerns U.S. monetary
policy will soon become less accommodative. Charles Evans,
President of the Chicago Federal Reserve said late Tuesday the
economy should improve enough in the second half of the year to
allow the central bank to scale back its $85-billion-a-month asset
purchases.
The comments came after Dennis Lockhart, president of the
Federal Reserve Bank of Atlanta, told Market News International
that the tapering process could begin at any of the three remaining
FOMC meetings this year.
Bearing most of the weakness for Europe trading, the FTSE 100
index fell 0.8% to 6,549.39.
That came after the U.K. central bank provided explicit forward
guidance on monetary policy, saying its key rate will remain at
0.5%, a record low, until the country's unemployment rate drops to
7%. Stocks in London fell sharply, then rebounded higher.
"The BoE expects unemployment to fall to 7% by late 2016, but
recent pickup in economic data suggests this could be a lot
sooner," said Fawad Razaqzada, technical analyst at GFT.
"However Carney warned that the 7% threshold is not 'a promise
on rates and a breach won't imply immediate rate rise.' What's
more, he said the BoE's 'policy stance will depend on economic
conditions'," said Razaqzada in a note to investors.
"So in other words, the announcement was not as dovish as many
had hoped. That's why following an initial drop, the GBP/USD is
rallying and currently is holding above pre-announcement levels,"
he said.
Germany's DAX 30 index dropped 0.4% to 8,263.70, while France's
CAC 40 index was flat at 4,031.46.
Among notable movers, shares of ING Group NV added 4.6% after
the Dutch firm said its banking arm posted solid results despite
the challenging economic environment, although the group reported a
drop in second-quarter profit.
Shares of Sanofi SA (SNY) climbed 1.2% after Berenberg lifted
the drug maker to buy from hold.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires