Selloff Worsens for European Stocks in Countdown to Fed Decision

  • Stoxx 600 posts its biggest weekly drop since August
  • ECB unsettled investors before Fed meeting, fund manager says

The Stoxx Europe 600 at Two-Month Low

A decline in European stocks deepened, sending equities to their worst week since August with only a few days to go before the Federal Reserve’s rate decision.

The Stoxx Europe 600 Index lost 2 percent at the close of trading, as all but 36 stocks fell. Carmakers and miners led declines -- Renault SA and BMW AG dropped at least 3.3 percent, while Anglo American Plc and BHP Billiton Ltd. slid 5.3 percent or more.

A 4 percent drop this week has dragged the Stoxx 600 to a two-month low before the Fed’s Dec. 16 meeting, at which traders are pricing in a 74 percent chance that officials will raise rates. The benchmark has lost 7.8 percent this month amid a rout in commodities and disappointment over the European Central Bank’s last meeting, defying a seasonal trend that has yielded gains in five of the past six Decembers.

“Although everyone is expecting a rate hike from the Fed next week, a lot of questions remain about the future of monetary policy,” said Francois Savary, chief investment officer at Geneva-based investment management firm Prime Partners. “You currently have one central bank in a tightening cycle, and the other can’t actually deliver on expectations. The ECB’s disappointment last week showed that Draghi’s hands are tied. That’s why investors are so unsettled now.”

Among stocks active on corporate news, Eurofins Scientific SE tumbled 9.7 percent after canceling a share sale, citing poor market conditions. Old Mutual Plc, which gets most of its revenue from southern Africa, slid 11 percent to cap its worst two-day drop since 2009 after South Africa’s president fired his finance minister yesterday.

Bellway Plc added 4.1 percent after the British homebuilder forecast its average selling price will increase about 10 percent this financial year.

National Bank of Greece SA climbed 10 percent. The lender tumbled 96 percent in the past month through yesterday, as it sold new shares for less than market prices.

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