European Shares Slip Ahead of Fed’s Decision

By Purvi Agarwal and Sanchayaita Roy
(Reuters) – European shares slipped on Wednesday ahead of the U.S. Federal Reserve’s monetary policy decision, while a persisting Middle East conflict also added to investor jitters.

The pan-European STOXX 600 index was down 0.2% at 541.02 points, as of 0839 GMT, marking more than three-week lows.

Markets awaited the Fed’s monetary policy meeting, where interest rates are widely expected to remain unchanged. Comments from policymakers will be closely monitored to gauge how the U.S. central bank intends to navigate an uncertain trade environment.

> “The committee is pretty much at a consensus that they need to take a step back for a while and wait for things to settle down before they can make any more decisions,” said Michael Field, chief equity strategist at Morningstar.

Field noted that the Middle East tensions had further “cemented” the wait-and-see approach of the Fed.

The ongoing hostilities between Iran and Israel extended to the sixth day, with increasing worries over the involvement of the U.S. military in the conflict as it deployed more fighter aircraft to the Middle East.

The heightened tensions add more caution to markets that were already grappling with U.S. President Donald Trump’s erratic tariffs, with little progress on trade deals as the July 8 tariff-pause deadline approaches.

Barclays forecasts a year-end 2026 target of 620 for the STOXX 600, citing Germany’s stimulus measures and rate cuts as key drivers for this optimistic outlook.

In the market, heavyweight healthcare shares led broader declines, down 0.9%.

Among stocks, Airbus gained 3% after the planemaker raised the upper range of its dividend payout target ahead of a business update.

Gerresheimer rose 7.3%, topping the STOXX 600, after the German medical packaging maker said it was informed KPS Capital Partners was still in talks with Warburg Pincus on a potential joint takeover bid.

Regional indexes were largely mixed. London’s FTSE 100 gained slightly after data showed that British inflation eased as expected in May. However, it is unlikely to influence the central bank’s decision on Thursday.

Sweden’s central bank cut its key interest rate to 2.00% from 2.25% as expected, citing mild inflationary pressures that gave it room to boost weak economic growth.