European shares keep losses in check after Fed calms fears

European shares recovered most of their day's losses to remain near record highs on Wednesday after a dovish tone from the US Federal Reserve calmed fears among investors that had been brought about by rising inflation in the US.

Fed chairman Jerome Powell said monetary policy would offer "powerful support" to the economy "until the recovery is complete".

European Central Bank policymakers have also stressed in recent weeks that they will not remove support measures prematurely as the economic recovery is still under way.

Dublin

The Iseq closed 0.45 per cent lower as stocks exposed to the impact of Covid-19 struggled. Ryanair shed 0.8 per cent and finished at €15.60 amid declines for several European airlines, while Dalata Hotel Group dropped 5.8 per cent to €3.75.

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It was a lacklustre day for most stocks, with building materials group CRH edging down 0.3 per cent to €42.01 and food group Kerry losing 0.6 per cent to €121.10.

Packaging company Smurfit Kappa nudged 0.3 per cent lower to €46.32, while Hibernia Reit fell 3 per cent to €1.27.

London

The FTSE 100 ended 0.5 per cent lower as a stronger sterling weighed on multinationals.

Heavyweights Unilever, GlaxoSmithKline and Diageo – whose overseas earnings are eroded by a stronger pound – were also among the top drags as sterling rose after inflation jumped to its highest in almost three years.

The domestically-focused mid-cap index fell 0.8 per cent, with travel stocks down 1.2 per cent over concerns on the effects of a jump in Covid-19 cases.

AstraZeneca lost 1 per cent and was the second biggest drag on the FTSE 100 after Britain's competition regulator cleared its buyout of US-based Alexion.

Barratt Developments gained 2 per cent after it forecast 2021 profit to be marginally above the top end of market expectations. Snack food firm SSP Group tumbled 4.3 per cent on its chief executive's plans to step down from his role at the end of 2021.

Germany-headquartered TUI , the world's largest holiday company, shed 7.2 per cent on reports that had it cancelled more holidays this month and next as the Delta variant of the coronavirus races around the globe.

Europe

The pan-European Stoxx 600 index ended 0.1 per cent down after had lost as much as 0.4 per cent during the session, after hitting a record high on Tuesday. Miners, banks, technology and auto stocks gained between 0.3 per cent and 1 per cent to keep overall losses in check, while stocks in Frankfurt and Paris finished flat.

Among individual stocks, Swedish telecoms operator Tele2 gained 5.9 per cent after reporting an 8 per cent rise in quarterly core earnings, helped by cost savings and a reduction in pandemic-related headwinds.

German fashion house Hugo Boss rose 2.1 per cent after forecasting that revenue would grow 30-35 per cent this year. German airline Lufthansa slipped 1.8 per cent after saying passenger numbers were currently about 40 per cent of pre-pandemic levels, and that it aimed to reach 60-70 per cent by the end of the year.

US

Wall Street’s main indexes eased by early afternoon New York time, with the S&P 500 retreating from a record high as a decline in economy-sensitive cyclical stocks outweighed an early boost from growth stocks after the reassuring comments from the Federal Reserve.

Apple shares were trading 2.3 per cent higher after a report that the iPhone maker is planning a "buy now, pay later" service.

JPMorgan Chase and Goldman Sachs reported strong earnings. Bank of America, Wells Fargo and Citigroup also beat profit estimates, although Bank of America fell 3.8 per cent as its mainstay lending business took a hit from low interest rates.

American Airlines jumped 2.9 per cent after it forecast positive cash flow. – Additional reporting: Reuters