Paris: European stocks slipped in early trade on Thursday, trimming the previous session’s 2.4% rise, as investors turned cautious after the US Federal Reserve reiterated concerns over the economic outlook.
At 2:30pm, the FTSEurofirst 300 index of top European shares was down 0.7% at 847.92 points, led lower by pharma, chemical and energy stocks.
Novartis dropped 1.4%, Bayer lost 1.6% and Total fell 1.3%.
The Federal Reserve on Wednesday held interest rates near zero and sounded a cautious note on the economy, despite some hopes that the worst of the global economic downturn may soon be over.
The US central bank, concluding a two-day meeting, said it would hold overnight rates in a range between 0 to 0.25% and gave no hint of an imminent exit from its easy monetary policy.
“The Fed was cautious, but it’s a good thing as it doesn’t fuel inflation expectations,” said David Thebault, head of quantitative sales trading, at Global Equities, in Paris.
“The weakness we’ve seen recently on the market has been profit taking. We might move sideways during the summer, but appetite for equities from institutional investors is definitely rising and they could seriously start buying in the fall,” he said.
French bank Credit Agricole dropped 4.9% on market talk that the lender’s results could come in lower than analysts’ consensus, traders said. A Credit Agricole spokesman declined to comment.
“Word is that the consensus is being readjusted to the downside,” a Paris-based trader said.
Sanofi-Aventis shed 3.5%, as dealers and analysts cited concerns raised by some scientists that the company’s key blockbuster diabetes treatment Lantus might be linked to cancer risk.
There was also vague talk of a possible bid for AstraZeneca , which was up 1.6%, although analysts were sceptical. Officials at Sanofi declined immediate comment.
On the upside, France’s Bouygues rose 4% after Goldman Sachs upgraded its rating on the stock to “buy” from “neutral”.
Swedish clothing retailer Hennes & Mauritz gained 1.1% after posting second-quarter profits above market expectations.
Porsche surged 5%, propelled by renewed speculation that the car maker was close to a deal with Qatar to give the Gulf state a shareholding in Volkswagen, a move that would clear the way for the two German car makers to merge.
Around Europe, UK’s FTSE 100 index was down 0.1%, Germany’s DAX index down 0.7%, and France’s CAC 40 down 0.5%.
Since reaching a record low in early March, the FTSEurofirst 300 has risen 32 percent, and is on track to record its best quarterly performance since late 1999.
But Europe’s benchmark index is still down 48% from their multiyear peak reached in mid-2007.