(Reuters) - European shares closed lower for the first time in seven sessions on Tuesday, as weak earnings dampened optimism surrounding the U.S.-China trade progress and ahead of an expected interest-rate cut by the U.S. Federal Reserve later this week.
“The markets are at new highs in Europe and in the U.S. and that is also something that could be pushing investors to take some profit,” said Roland Kaloyan, head of European equity strategy at Société Générale.
Finnish paper firm Stora Enso's STERV.HE slumped 5.1% as its quarterly profit dropped and it warned of global political uncertainties.
A top executive at France’s number one telecoms operator said sales in Spain, the telecoms group’s second-biggest market, would remain under pressure from competitors cutting prices in coming months.
Also weighing on the sector was British oilfield services firm Hunting HTG.L, down 1%, after the company said it sees annual core profit at the lower end of market expectations as it grapples with a slowdown in the U.S. onshore drilling market.
Expectations were low going into the European corporate earnings season, but after its three busiest weeks the overall picture has been slightly better than expected with companies pulling off modest beats.
Banks .SX7P were dragged lower by shares of Swedbank SWEDa.ST, which fell 3%, after Estonia's financial regulator said it decided to open a misdemeanor case with regard to the Estonian subsidiary of the Swedish lender.
Among positive movers, shares of German healthcare group Fresenius FREG.DE gained nearly 5% to top the STOXX index after beating revenue expectations on strong sales in emerging markets and growth in its dialysis unit.
Airbus AIR.PA edged 1% higher after Indian budget carrier IndiGo placed an order for 300 A320neo-family jets worth at least $33 billion at recent catalog prices.
The catalyst for markets this week is expected to be the Fed meeting where officials are expected to cut interest rates for the third time this year, but focus will be squarely on further clues from the central bank on the policy path ahead.
“Markets are 90% pricing in a [rate] cut,” said David Madden, analyst at CMC Markets.
“I don’t think they’ll be leaving the door open for another cut in 2019 or early 2020 because that could just be setting [expectations] that every time the markets fear a recession, a rate cut is warranted.”
Reporting by Shreyashi Sanyal in Bengaluru; Additional reporting by Agamoni Ghosh and Lisa Pauline Mattackal; Editing by Shounak Dasgupta, Arun Koyyur and Ed Osmond
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