EUROPE MARKETS: European Stocks Slip As Traders Wait For Fed Rate Update

Heineken slides after Femsa sells stake

European stock markets traded slightly lower on Tuesday, with investors staying cautious ahead of this week's Federal Reserve meeting that will be scrutinized for hints on future U.S. monetary policy.

The Stoxx Europe 600 index dropped 0.2% to 381.19, partly erasing a 0.3% gain from Monday.

Among biggest decliners in the pan-European index, shares of Heineken NV (HEIA.AE) slumped 4% after Mexico's Femsa (FMX) late Monday said it's selling a 5.24% stake in the Dutch brewer.

Fed in focus: Traders in Europe were waiting for the U.S. Fed to provide its policy update on Wednesday, which could impact multiple asset classes, such as stocks globally, currencies and gold. The two-day meeting kicks off on Tuesday.

The central bank is widely expected to keep rates on hold, but to start unwinding its $4.5 trillion balance sheet (

"With investors still re-evaluating the Federal Reserve's ability to raise U.S. interest rates in December, attention will be directed towards Janet Yellen and her thoughts on the recent inflation trends in the U.S.," said Lukman Otunuga, research analyst at FXTM, in a note.

"A hawkish Yellen, who leaves the door open for another rate hike before year-end, is likely to offer the dollar a lifeline," he added.

If the dollar rises against the euro and pound it can give a boost to European equities, as it means eurozone and British goods and services become cheaper for American businesses and consumers to purchase.

The euro bought $1.1995 on Tuesday, up from $1.1954 late Monday in New York. The pound traded at $1.3543, up from $1.3494 on Monday.

Read:'We were wrong' -- HSBC reverses bearish pound view after BOE rate hints (

European economic news:France cut its budget deficit forecasts ( for this year and next after taking austerity measures over the summer and as economic growth has been stronger than initially expected.

At 10 a.m. London time, or 5 a.m. Eastern Time, the German Zew economic sentiment index is out.

Indexes: Germany's DAX 30 index fell 0.1% to 12,544.60, while France's CAC 40 index lost 0.1% to 5,223.78.

The U.K.'s FTSE 100 index was up 0.1% at 7,256.65.

Movers: Shares of J Sainsbury PLC (SBRY.LN) rose 1.9% even as the grocer lost market share in the 12 weeks to Sept. 10.

Ocado Group PLC (OCDO.LN) fell 4.8% as the online grocery delivery company said average order size during the 13 weeks to Aug. 27 fell 1.2% compared with the year-ago period. Overall, Ocado's revenue rose 14% during the fiscal third quarter.

Telia Co. AB (TELIA.SK) picked up 1.1% after the Scandinavian telecom operator sold its final 7% stake in Turkcell Iletism Hizmetleri AS (TCELL.IS) , raising 1.78 billion Turkish lira ($513.4 million).

(END) Dow Jones Newswires

September 19, 2017 04:28 ET (08:28 GMT)