LONDON: European stock markets dipped Thursday, erasing early gains won following advances across Asia and on Wall Street as the Federal Reserve dampened expectations of further rises to US interest rates.
Around 1330 GMT, London’s benchmark FTSE 100 index was down 0.2 percent compared with Wednesday’s close.
In the eurozone, Frankfurt’s DAX 30 shed 0.2 percent and the Paris CAC 40 lost 0.3 percent.
“Following a perky start the European indices have begun to tick back this Thursday, with a similarly negative showing from the US markets on the card,” said analyst Connor Campbell at Spreadex trading group.
“Whilst an April (US) rate rise seems firmly off the table, the fact that there appears to be a slight increase in the number of hawks in the central bank may have spooked investors.”
Federal Reserve policymakers were broadly worried about the threat of slower global growth to the US economy, the minutes from their March 15-16 meeting showed Wednesday.
As they decided against an interest rate hike at that meeting, several also cautioned against an increase in April, saying it would signal a sense of urgency over US monetary conditions that “they did not think appropriate,” the minutes said.
Amid the uncertain outlook, the euro dropped against the dollar in trading on Thursday, while the US currency struggled further versus the yen — which is considered a safe bet in times of economic turmoil.
The prospect of US borrowing costs staying unchanged until at least June saw the dollar sitting at 17-month lows against the yen and also struggling against emerging market currencies.
“The dominant force in the Fed’s policy making is volatility and global risks against the domestic risks of inflation and employment,” said London Capital Group head analyst Brenda Kelly.
“In this context, the market gives nearly no probability for an April action from the Fed and thus the market now looks to sell the greenback for now.”
Wall Street stocks opened lower Thursday, giving back some of the prior session’s gains.
