London: European shares retreated on Tuesday, led lower by miners, on concerns about Ireland’s debt ahead of a key meeting of euro zone finance ministers and renewed talk of further policy tightening in China.
At 0929 GMT, the FTSEurofirst 300 index of top European shares was down 0.9% at 1,102.19 points after closing 0.8% higher in the previous session.
Miners topped the decliners, as key base metals prices fell on fresh concerns that China, one of the world’s top commodity consumers, could further tighten monetary policy.
The STOXX 600 Basic Resources index slipped 2.3%, while BHP Billiton, Antofagasta, Rio Tinto and Xstrata fell 1.9 to 2.9%.
“We have certainly seen an increase in uncertainty and the focus has been on Europe and on what’s happening with Ireland and the peripheral countries. All eyes are looking towards the Brussels meeting of EU finance ministers,” said Keith Bowman, equity analyst at Hargreaves Lansdown.
Euro zone finance ministers are expected to discuss on Tuesday the future euro zone crisis resolution mechanism, which Germany wants to start from 2013, replacing the €440 billion European Financial Stability Facility set up after Greece sought help in May.
The Irish government said it has been holding talks on how to provide stability for its banks and finances but denied a state rescue was needed to stop its problems spilling into other countries.
Financial shares, which often derive strength from solid macroeconomic environment, were on the back foot, with the STOXX 600 banking index slipping 1.4%. Standard Chartered, Credit Agricole, Bankinter and Natixis fell 1.7 to 2.6%.
“There is also some degree of uncertainty with the US as well. We saw some mark up in treasury yields yesterday, with a group of economists questioning the Federal Reserve’s QE2 programme.”
European shares climbed to a two-year high a week ago on the US Federal Reserve’s further stimulus plans, but doubts about whether the Fed would ultimately buy the $600 billion worth of bonds it had promised has put some pressure on equities.
New York Federal Reserve president William Dudley defended on Tuesday the controversial bond-buying programme, saying the Fed was not expressly seeking to devalue the dollar, while he cautioned that the programme was unlikely to generate a spurt of growth.
Among individual movers, German chipmaker Infineon rose 1.2% after reporting strong fourth-quarter results and said it plans to give back cash to shareholders for the first time in a decade.
British luxury goods group Burberry rose 0.2% after beating forecasts with a 49% jump in first-half profit as fewer markdowns and better management of stock combined with an already-reported rise in sales.
Across Europe, Britain’s FTSE 100, Germany’s DAX, France’s CAC 40, Italy’s MIB, Spain’s IBEX 35 and Ireland’s ISEQ fell 0.6 to 1.5%. The Thomson Reuters Peripheral Eurozone Countries Index was down 1.2%.