Banks drag stocks lower as investors seek Fed support

Bloomberg

Banks dragged European shares lower, while investors awaited the Federal Reserve’s latest policy meeting for signals on the health of the world’s biggest economy and the trajectory of interest rates.
Credit Suisse Group AG led declines among banks, sliding 6.5 percent, with four Europe-based traders citing the absence of Chief Financial Officer David Mathers from a conference in London as a reason for the drop. Deutsche Bank AG slipped 4.8 percent after co-Chief Executive Officer John Cryan said the lender may post a loss for the year as it overhauls its business.
The Stoxx Europe 600 Index slipped 0.2 percent to 340.19 in London. Shares fell from a two-month high on Tuesday, snapping two days of European Central Bank-spurred gains as commodity prices retreated and the Bank of Japan refrained from boosting its record monetary stimulus. The volume of shares changing hands today was 24 percent lower than the 30-day average.
“The focus right now is on how much confidence investors can place on central banks,” said Justin Urquhart Stewart, co-founder of Seven Investment Management in London. His firm oversees about $14 billion. “We’re looking for the Fed to reassure markets that there will be no knee-jerk reactions and no immediate changes – tightening will be slow and steady, taking account of market confidence. No drama is what we need.”
Investors are watching divergent central banks for indications of how far they will go to support global growth. Fed funds futures show the odds of a US rate increase by the end of June that have shot up to 54 percent from about 6 percent in the past month as data indicated growth is strengthening in the nation. China isn’t headed for a hard landing and the government will ensure expansion hits targets, Premier Li Keqiang said on Wednesday in Beijing.
UK stocks were little changed amid low trading volume on Wednesday, with the FTSE 100 Index gaining 0.1 percent before Chancellor of the Exchequer George Osborne presents his eighth annual budget to lawmakers, ahead of a Bank of England policy review on Thursday.
European equities have recovered about 12 percent from last month’s low, with commodity producers and banks leading the gains. Before the rebound, concerns about global growth and the efficiency of central-bank stimulus took stocks down 27 percent from an April record.
Automakers posted the best performance on the Stoxx 600 today as data showed the European car market expanded for a 30th consecutive month in February. Tullow Oil Plc led energy stocks higher, gaining 3.9 percent after finding oil at a well in Kenya.
Among shares moving on corporate news, Solvay SA advanced 1.2 percent after the chemical maker said it will divest its stake in a joint venture with Ineos earlier than planned. Brenntag AG jumped 7.8 percent after reporting 2015 profit that exceeded the average analyst projection.
Dufry AG reversed earlier declines, to rise 1.3 percent as the operator of duty-free stores posted 2015 sales that met estimates, even as earnings fell short.
Bilfinger SE tumbled 8.5 percent after the German industrial company said it won’t pay a dividend for 2015 after losses widened. Zodiac Aerospace dropped 5.7 percent after the maker of aircraft parts said annual profit probably won’t rise.