The Stoxx 600 slid 1.7 percent to 354.97 at 12:07 p.m. in London, erasing a weekly advance. The U.S. central bank showed itself reluctant to call time on an era of record monetary stimulus amid market turmoil, rising international risks and slow inflation at home. Faltering Chinese growth and last month’s devaluation of the yuan in particular have shaken investor confidence in the economic outlook and roiled markets. The chances for a hike in December are now seen at about 44 percent.
“Stocks are pricing in the cost of a higher euro today, with the Fed being a lot more dovish than expected,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “The stronger currency really adds to pressure on the ECB to deliver something -- either an extension or an increase of the quantitative easing program, or both. That makes the Fed decision very supportive for bunds, but it will hurt European exporters in the short-term.”
The volume of Stoxx 600 shares changing hands was 43 percent higher than the 30-day average. A measure of European stock volatility rose 3.3 percent. The expiration of some futures and options on stocks and indexes, known as quadruple witching, may add to market volatility today.
Among shares moving on corporate news, Deutsche Bank AG fell 3.5 percent as a person with knowledge of the discussions said the German lender plans to close its Russian corporate banking and securities business. Abengoa SA slid 2.6 percent after two people familiar with the matter said banks are struggling to sell the Spanish renewable energy company’s loans.
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