European stocks fall ahead of Federal Reserve meeting to raise rates

European stocks fell from their highest level since January ahead of yesterday's US Federal Reserve meeting. The expected quarter percentage point interest rate increase was confirmed after the close of European markets, with the Fed's statement citing "realised and expected labour market conditions and inflation". New projections also showed central bankers expect three-quarter-point rate increases in 2017, up from the two seen in the previous forecasts in September, based on median estimates.

DUBLIN

The Iseq finished down 0.8 per cent on a day of low trading volumes and few dramatic movements in share prices, although most of the significant stocks declined. Ryanair fell 1.1 per cent to €14.30, while building materials group CRH edged down 0.25 per cent to €31.86. Glanbia fell 3.5 per cent to €15.31, while fellow food group Kerry also finished in the red, down 1.9 per cent at €64.80.

Real estate investment trust stocks Green Reit and Hibernia Reit declined 1.8 per cent and 1.7 per cent respectively. Bank of Ireland was down 1.3 per cent, to 23 cents, as banks fell back across Europe, while Paddy Power Betfair slipped 2.1 per cent, to €99.38.

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Building materials company Kingspan and drinks group C&C were among the few climbers, with the cider maker putting on 2.2 per cent to close at €3.77.

LONDON

The FTSE 100 dipped 0.3 per cent yesterday, dropping back from its highest closing level since October, pulled lower partly by Dixons Carphone. The electricals and mobile phone retailer was the top faller, down 6.6 per cent after warning in its results announcement that it was planning for tougher times. Miners were on the back foot as copper dropped ahead of the decision, although precious metals miners Polymetal and Fresnillo gained 6.4 per cent and 3.5 per cent respectively, as the price of gold was supported by a softer dollar.

Among FTSE 100 risers, software company Micro Focus advanced 4.2 per cent, posting its biggest rise in three months after results beat expectations. The FTSE 250 mid-cap index, which has higher domestic exposure, slightly underperformed the blue chips.

Meanwhile, the London-listed, Dublin-headquartered company DCC has appointed Dr Emma FitzGerald as a non-executive director, replacing Róisín Brennan, who is retiring from the board of the distribution and services group after an 11-year stint.

EUROPE

The Stoxx Europe 600 index fell 0.5 per cent at the close and the Euro Stoxx 50 index slid 0.8 per cent. Germany’s Dax finished down 0.4 per cent and the Cac 40 in France ended 0.7 per cent lower. Greek stocks fell sharply and the government’s borrowing rates jumped higher as investors fretted over a potential flare-up in the country’s bailout problems and the possibility of early elections in the country. The main stock market in Athens closed down 3.2 per cent while the yield on the country’s 10-year bond rose 0.28 percentage point to 7.01 per cent – above the 7 per cent level that is considered to be unaffordable.

Actelion was the second-worst performer in the Stoxx Europe 600 index, tumbling 9.2 per cent after Johnson & Johnson said it ended discussions for a potential deal with the Swiss drugmaker. Belgian supermarket chain owner Colruyt tumbled 9.4 per cent for the biggest drop in the Stoxx 600 after reporting retail-sales growth that missed estimates.

US

Wall Street stocks fluctuated after the Federal Reserve raised interest rates as expected and repeated that future increases would be gradual. Stocks in New York had edged lower ahead of the Fed’s announcement, as new data pointed to a loss of momentum in economic growth in the fourth quarter. US retail sales barely rose in November and industrial production recorded its biggest drop in eight months, while a separate report showed business inventories recorded their biggest drop in 11 months in October.

Before the Fed's statement, oil prices were running down about 2 per cent on renewed concerns about an oil glut, sparked by rising US crude inventories in storage. Oil major Exxon declined 1.3 per cent and was the biggest drag on the Dow Jones index. Hertz Global dropped 7.1 per cent after the car rental company said it would replace its chief executive and reduce its board size. – (Additional reporting: Bloomberg/Reuters)