European stocks fade before Fed interest rate clues

Europe's major stock markets fell Tuesday as investors cautiously awaited a US Federal Reserve meeting for clues on the timing of an interest rate increase in the world's top economy.

The US central bank's two-day gathering, which concludes on Wednesday, comes amid more signs of lethargy in the world economy.

"UK and European stocks edged lower on Tuesday, trimming a little more off the huge gains seen last week," said CMC Markets analyst Jasper Lawler.

"Risk avoidance is still reigning supreme before the interest rate decision from the Federal Reserve on Wednesday."

London's benchmark FTSE 100 index slid 0.31 percent to 6,397.30 points in late morning deals, after news of a third-quarter slowdown for the British economy.

In the eurozone, the Paris CAC 40 shed 0.54 percent to 4,870.92 points and Frankfurt's DAX 30 dipped 0.43 percent to 10,755.29 compared with Monday's close.

Traders are hoping for more guidance on the Federal Reserve's timetable for raising interest rates, with speculation brewing that it will delay any move until next year owing to recent turmoil on global markets and weakness in China.

The Fed is expected to again delay raising borrowing costs and leave its key rate near zero, where it has stood since December 2008 to stimulate economic growth.

Most Asian markets also retreated Tuesday as investors look ahead to central bank meetings in both the United States and also Japan this week.

In late morning London deals, the US dollar fell to 120.45 yen from 121.07 yen late Monday in New York and the euro declined to $1.1047 from $1.1059 over the same period.

The yen was edging up ahead of a Bank of Japan (BoJ) meeting where it faces pressure to unveil fresh stimulus following a string of below-par economics data.

Calls for more measures have grown since China's interest rate cut last week and hints from European Central Bank that it could widen its own easing programme in December.

"The Fed and the BoJ meetings this week are pivotal events that will determine whether this rally can go any higher," Angus Nicholson, an analyst at IG Markets Ltd. in Melbourne, told Bloomberg News.

"If we see the Fed push back raising interest rates toward 2016 and the BoJ step up stimulus, that will have a big positive impact on equities."

Back in London, energy giant BP's share price rose 0.62 percent to 386.80 pence as investors digested better than expected third-quarter results.

BP said profits collapsed as oil prices halved on back of the stubborn global supply glut.

Profit adjusted to reflect the value change in oil inventories sank 40 percent to $1.82 billion from $3.04 billion. However, that beat market expectations of $1.26 billion.

"BP have managed to surprise the market," noted Mike McCudden, head of derivatives at online broker Interactive Investor.