Europe stocks fall on hawkish Fed chat, ECB stimulus path; Tesco shares rally

European stock markets were lower in morning trade Wednesday as investors digested hawkish comments from U.S. Federal Reserve officials and a report that policymakers in Europe were looking at tapering asset purchases.

The pan-European STOXX 600 was down 0.99 percent, started the trading day in lackluster fashion. Investors reacted to the latest remarks from Fed officials indicating a forthcoming hike in interest rates. On Tuesday, Richmond Fed President Jeffrey Lacker said there was a strong case for raising interest rates, while on Wednesday, in a speech in New Zealand, Chicago Fed President Charles Evans said he would be “fine” with hiking rates by year-end if the data remained supportive, Reuters reported.

Meanwhile in Europe, a Bloomberg report on Tuesday said the European Central Bank (ECB) might taper bond purchases before the expected March end of its quantitative easing program. The ECB later denied it had discussed the subject, Reuters reported.

Elsewhere, concerns over Brexit continue to weigh on sterling, with the currency hitting a 31-year low against the dollar on Tuesday. In the commodity markets, gold prices edged higher early on Wednesday, after falling 3.3 percent in the prior session to their lowest in more than three months, as the dollar eased back and equities fell, Reuters reported. Precious metals miners Fresnillo and Randgold Resources were sharply lower as a result.

Oil prices also rose in early trading on Wednesday after a report that U.S. fuel inventories may have fallen for a fifth straight week, but the oil and gas sector was broadly lower.

Tesco shares rally

On the earnings front, British supermarket chain Tesco reported a 60.2 percent year-on-year rise in first-half operating profit before exceptional items, sending shares surging over 8 percent higher. This helped drag up other stocks in the sector including WM Morrison, Sainsbury’s and France’s Casino, which got a price target upgrade from HSBC.

Deutsche Bank shares were higher after German market newsletter Platow Brief reported that the lender is looking at a settlement of around $4-5 billion by the end of October with the U.S. Department of Justice, much lower than the $14 billion the authorities were seeking.

France’s market watchdog blocked a proposed takeover of SFR by Altice. Shares of SFR were deep in negative territory while Altice was also trading lower.

Source: CNBC