LONDON, May 30 (Reuters) - The European equity pull-back deepened on Thursday, with carmaker Renault among the worst performers, as uncertainty over a possible end to U.S economic stimulus measures hit markets.
The pan-European FTSEurofirst 300 index, which had fallen 1.8 percent in the previous session, edged down by 0.1 percent to 1,222.43 points By 0712 GMT, while the euro zone’s blue-chip Euro STOXX 50 index fell 0.1 percent to 2,783.58 points.
Renault was among the worst-performers on the FTSEurofirst 300, falling 2.4 percent, which traders attributed to a move by Goldman Sachs to cut its rating on Renault to “sell” from “neutral.”
Global equity markets have rallied this year, helped by injections of liquidity and rate cuts by major central banks, with the FTSEurofirst 300 hitting a near 5-year high this month, while Germany’s DAX also reached all-time highs.
However, the rally has since faded over the last week on signs that the U.S. Federal Reserve may soon scale back some of its stimulus measures following signs of a recovery in the U.S. economy.
Clairinvest fund manager Ion-Marc Valahu said he had already been “short” on the Swiss SMI and German DAX equity indexes, betting on pullbacks on those markets.
“I was already ‘short’ but I‘m not going to add to it,” he said.
Ian Richards, head of equities strategy at Exane BNP Paribas also felt any scaling back of the Fed’s stimulus measures remained some way off.
“(And) we think Fed tapering action - potentially the big event for markets this year remains several months off. As such we do not think this is the appropriate time to make changes to the shape of European equity portfolios,” he wrote in a note.