Europe close: Stocks slip ahead of US Fed policy announcement

Stocks on the Continent fell going into the US central bank's policy announcement on Wednesday evening, weighed down by very weak corporate updates coming from both sides of the Atlantic.

Investors were also digesting the somewhat mixed reports out overnight around the ongoing US-China trade talks, alongside reports that the Brussels was focused on granting just a short extension to Article 50 so as to avoid damaging the current UK government.

Indeed, in the afternoon, Prime Minister Theresa May herself had appeared to open the door to her resignation if Article 50 was extended beyond 30 June.

Commenting on the session's action, IG's Chris Beauchamp said: "Weakness is being seen across equity markets in the UK, Europe and US this afternoon. In part, this is just pre-Fed nerves, but the fact that recent gains are being so easily erased speaks to a deeper unease about the outcome of US-China trade talks.

"Reports suggest the two sides are failing to agree a deal due to a lack of concessions from the US, and the possibility of a breakdown is increasing, putting markets at risk of another pullback. However, this kind of short-term weakness would probably be viewed as healthy in the long-run."

By the end of trading, the benchmark Stoxx 600 was down by 0.90% to 380.84, alongside a drop of 1.57% to 11,603.89 for the German Dax as shares of Bayer crumbled after a court ruling in the US found that one of the herbicides it inherited as part of its Monsanto acquisition triggers cancer.

To take note of as well, some reports indicated that Dutch Prime Minister, Mark Rutte's, governing coalition risked losing its one-seat majority in the country's Senate after a provincial vote later on Wednesday.

The Cac-40 in Paris fared better throughout most of the session, having sported only slight losses, but finished down by 0.80% to 5,382.66 while Milan's FTSE Mibtel gave back 0.47% to 21,330.21.

There was little economic news out on Wednesday, although according to the German ministry of finance, the rate of increase in producer prices in the euro area's largest economy was steady versus the prior month in February at up by 2.6% year-on-year (consensus: 2.9%).

In parallel, the Belgian central bank's consumer confidence index for the month of March printed at -6.0, down from a reading of -7.0 for the month before.

Later in the day, the US Federal Reserve was set to publish its decision on interest rates at 1800 GMT, followed by a press conference by its Chairman a half hour later.

Analysts appeared to be divided on just how 'dovish' US central bankers would prove to be, although as far as could be gleaned from Fed funds futures, financial markets had begun to price-in a small probability of a rate cut by the end of 2019.

Back on the corporate front, Switzerland's UBS was down by 2% after the head of the investment bank characterised conditions over the first three months of 2019 as some of the hardest for many years.

Speaking in London, the Swiss lender's chief, Sergio Ermotti, said that year-to-date revenues at its investment banking unit had declined by a third, amid a dearth of flotations and merger activity.

In other German news, BMW shares hit the skids after the company told shareholders to expect profits in 2019 to come in "well below" the prior year level and that it would launch a €12bn cost-savings drive in order to offset the hit from trade spats and investments in the electric car arena.

Further dampening sentiment on Wednesday, stock in US shipping giant FedEx was sharply lower after warning of weakness overseas, particularly in Europe.