European Stocks Rise, Paring Gains in Countdown to Fed Decision

  • Stoxx 600 trims advance of as much as 1% as oil falls
  • Casino, Altice among gainers, while Dialog Semiconductor falls

Investors pushed European stocks higher for a second day before the Federal Reserve’s much-awaited interest-rate decision, though equities pared gains in the last hour of trading.

The Stoxx Europe 600 Index climbed 0.2 percent at the close of trading in London, trimming an advance of as much as 1 percent. Anglo American Plc led an advance in miners, up for the first time in 12 days. Energy producers, leading the rally earlier, ended little changed as oil slipped.

“The real impact on today’s decision happened in the last seven, eight days,” said Guillermo Hernandez Sampere, who helps manage about 250 million euros ($266 million) as head of trading at MPPM EK in Eppstein, Germany. “Investors will listen very carefully to the wording from the Fed. What investors want to hear is that the U.S. economy is in good shape and that the speed further rate hikes will be very gradual.”

Traders are pricing in a 76 percent chance that the Fed will act today. The decision will take place after the close of European markets.

While history shows shares from the euro area have dropped in the weeks after a Fed interest-rate increase, losses have either eased or completely reversed in the three months following the central bank’s move, data compiled by Bloomberg going back to 1987 show.

The Stoxx 600 rallied the most in two months yesterday, rebounding from its lowest level since October. It traded at 15.7 times estimated earnings, compared with 17.3 for the Standard & Poor’s 500 Index.

After a 14 percent jump from its September low through the end of November, the Stoxx 600 lost as much as 9.3 percent as the European Central Bank’s additional stimulus fell short of expectations and a rout in commodities worsened. The index is heading for its worst December since 2002.

Among stocks moving on corporate news, Casino Guichard-Perrachon SA rallied 6.5 percent after saying it will sell assets to cut debt by more than 2 billion euros ($2.2 billion) next year. Rolls-Royce Holdings Plc advanced 4.9 percent after announcing a management shakeup. Vestas Wind Systems A/S climbed 4.3 percent as U.S. Congress is set to vote on a bill that would extend renewable-energy credits. Altice NV surged a record 13 percent, after reaching its lowest price since April 2014 on Monday, as Deutsche Bank AG recommended buying the shares.

Dialog Semiconductor Plc lost 4.8 percent after cutting its fourth-quarter revenue forecast, and peer ASM International NV dropped 4.6 percent. Zodiac Aerospace fell 3.7 percent after reporting a decline in quarterly sales.

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