European stocks decline amid Fed jitters; Dax down 0.40%

Investing.com - European stocks decline on Tuesday, as markets were jittery ahead of the Federal Reserve's highly anticipated policy meeting, due to begin later in the day.

During European morning trade, the EURO STOXX 50 retreated 0.60%, France’s CAC 40 tumbled 0.96%, while Germany’s DAX 30 dropped 0.40%.

Investors remained cautious ahead of the outcome of the Fed’s two-day policy meeting on Wednesday, with some expecting the bank to announce a small reduction in the pace of its USD85 billion-a-month asset purchase program.

Markets were also eyeing U.S. inflation data due out later in the session amid concerns that the subdued inflation outlook could prompt the Fed to keep its stimulus program in place for longer.

European equities had found support on Monday after data showed that the euro area’s composite purchasing managers’ index rose to a three month high in November, indicating that European Central Bank policymakers will not need to step up stimulus measures.

Manufacturing activity in Germany rose to a 30 month high but the contraction in France deepened in November, sparking concerns that the country could fall back into a recession.

Financial stocks were broadly lower, as French lenders BNP Paribas and Societe Generale declined 0.87% and 0.70%, while Germany's Deutsche Bank slid 0.42%.

Among peripheral lenders, Spanish banks BBVA and Banco Santander both slipped 0.20%, while Italy's Unicredit and Intesa Sanpaolo retreated 0.66% and 0.67% respectively.

Elsewhere, Rexel tumbled 1.82% as Ray Investment SARL said it will sell a 7% stake in the electrical-equipment distributor.

On the upside, Zurich Insurance Group rallied 1.64% after Swiss Re Ltd.’s Chief Financial Officer George Quinn quit to join Switzerland’s biggest insurer.

In London, commodity-heavy FTSE 100 lost 0.54%, weighed by losses in the energy sector.

Shares in oil and gas major BP plummeted 1.44%, while rivals Anglo American and Petrofac retreated 1.89% and 1.92%.

Mining companies were also on the downside, as Glencore Xstrata shed 0.44% and Rio Tinto declined 0.54%, while Vedanta Resources and Polymetal dropped 0.75% and 0.87% respectively.

In the financial sector, the Royal Bank of Scotland inched down 0.06% and Lloyds Banking shed 0.30%, while Barclays retreated 0.74% and HSBC Holdings tumbled 0.96%.

In the U.S., equity markets pointed to a moderately lower open. The Dow Jones Industrial Average futures pointed to a 0.06% dip, S&P 500 futures signaled a 0.12% fall, while the Nasdaq 100 futures indicated a 0.13% loss.

Later in the day, the ZEW Institute was to release its closely watched report on German economic sentiment. The euro zone was also to publish data on consumer inflation.