UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Shares of home improvement retailer Kingfisher suffer

European stocks fell Wednesday, as investors prepared to hear that the Federal Reserve likely has decided to continue raising interest rates.

How markets are moving

The Stoxx Europe 600 index fell 0.2% to 374.68, as only the utility sector moved higher. The consumer services group was putting in the worst performance. On Tuesday, the index rose 0.5% (http://www.marketwatch.com/story/european-stocks-turn-lower-as-tech-stocks-weigh-on-us-futures-2018-03-20).

Germany's DAX 30 fell 0.2% to 12,282.75 and France's CAC 40 index gave up 0.3% at 5,236.01.

The U.K.'s FTSE 100 index shed 0.3% at 7,040.83.

The euro bought $1.2277, up from $1.2241 late Wednesday in New York. The pound traded at $1.4024, more than $1.3999.

Check out:Pound could surge in 'frenetic' week of Brexit and BOE news, ING says (http://www.marketwatch.com/story/pound-could-surge-in-frenetic-week-of-brexit-and-boe-news-ing-says-2018-03-16)

What's driving markets

The widely anticipated Fed policy decision for March is on deck for global markets, and investors have priced in expectations that it will raise its benchmark rate by a quarter-percentage point. Investors are watching for hints the U.S. central bank may hike rates four times this year, compared with three that have been expected.

The Fed's monetary policy tends to drive financial markets globally, as many companies do business in the world's largest economy and it can lift borrowing rates for them. The decision is due at 2 p.m. Eastern Time, or 6 p.m. London time. New Fed Chairman Jerome Powell will hold his first post-announcement press conference at 2:30 p.m. Eastern.

Check out:5 things to watch from the Fed decision (http://www.marketwatch.com/story/5-things-to-watch-from-the-fed-decision-2018-03-19)

And read:It's time for stock-market investors to refocus on the Fed (http://www.marketwatch.com/story/now-its-time-for-the-stock-market-to-refocus-on-the-fed-2018-03-16)

The Bank of England's policy decision will follow on Thursday. Ahead of that, U.K. data on Wednesday showed U.K. wage growth met or exceeded forecasts (http://www.marketwatch.com/story/uk-wage-growth-accelerates-in-january-2018-03-21) in January. Investors were looking for a solid reading to help prompt the Bank of England to raise interest rates in May, after data on Tuesday showed inflation in February was lower than expected.

Also on the radar Wednesday, European Union officials are expected to unveil a proposal to tax revenue made by big tech companies that operate in Europe. Reports indicate (http://www.marketwatch.com/story/eu-may-impose-new-3-tax-on-tech-companies-revenues-report-2018-03-14) the tax would be set at 3% and apply to companies with more than 100,000 users. That could affect companies including Facebook Inc. (FB) and Alphabet Inc.'s Google (GOOGL) . The Stoxx 600 Technology Index edged up 0.2% during Wednesday's trade.

What strategists are saying

"There is a small chance that we see a 50-basis-point rate hike [by the Fed], but most analysts, me included, think this would be an unnecessary shock for markets, despite the strong growth story currently in the U.S.," said Axi Trader's chief market analyst James Hughes in a note.

"In his prepared notes before his first appearance as Fed chairman, [Jerome] Powell talked about a solid growth and robust jobs market backdrop. This could back up the recent Fed dot chart that shows a swing towards just 3 rate hikes this year instead of the 4 that market is so obsessed with. All in all the focus ... will be on which way Powell hints," said Hughes.

"Traders will now look to the Bank of England for some much-needed clarity. Headwinds are starting to dissipate -- a Brexit transition deal is in place, inflation from the devalued pound is working its way out the system and wages, which can be a stubborn beast, are proving to be resilient," wrote Fiona Cincotta, City Index's senior market analyst.

The pound/dollar pair is trading higher, "finding resistance at $1.4070 [and] a meaningful move above this level could see GBP/USD target $1.41 in the near term," she added.

Stock movers

At the top of the Stoxx 600, Ubisoft Entertainment SA shares (UBI.FR) rose 4.3% after French media conglomerate Vivendi sold its stake in the video game publisher for EUR2 billion euros (http://www.marketwatch.com/story/vivendi-to-sell-stake-in-ubisoft-for-2-billion-2018-03-21). Vivendi (VIV.FR) shares were also higher, by 1.3%.

Kingfisher PLC shares (KGF.LN) sank 7.9% after the home improvement retailer behind the Screwfix and B&Q stores posted a 10% fall in fiscal 2018 pretax profit and said there's been a mixed performance in key markets. (http://www.marketwatch.com/story/kingfisher-2018-profit-falls-10-2018-03-21)

The U.K. is more uncertain, France is encouraging yet volatile, whilst the market in Poland remains supportive," said Kingfisher CEO Véronique Laury in a statement.

Hermes International SCA (RMS.FR) tacked on 3.8% as the French luxury retailer posted an 11% rise in profit for 2017 (http://www.marketwatch.com/story/hermes-net-profit-rises-11-for-2017-2018-03-21) on revenue growth across all its geographical markets. The maker of Birkin bags also confirmed its "ambitious goal" for revenue growth at constant exchange rates.

(END) Dow Jones Newswires

March 21, 2018 06:40 ET (10:40 GMT)

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