Europe midday: Shares in red as traders wait for Fed; Bunzl slides

(Sharecast News) - European shares were lower on Tuesday as all eyes turned to the start of the US Federal Reserve's two-day policy meeting, with expectations of a 25-basis point cut in rates. The pan-regional Stoxx 600 index was down 0.28% at 514.40 points in early trade. A decision from the Fed is expected Wednesday, after which attention will turn to the UK a day later, where the Bank of England is expected to keep rates on hold.

Germany's Dax edged ahead after Chancellor Olaf Scholz lost a no-confidence vote in his government and called elections for February 23. All other major European bourses were mixed.

In the UK, the unemployment rate was steady in the three months to October, while pay growth picked up, according to official figures released on Tuesday.

The unemployment rate came in at 4.3%, unchanged from the previous month. Meanwhile, average pay, including and excluding bonuses, rose 5.2%. This compares to 4.9% growth for regular earnings in the previous three months, and 4.4% for total earnings.

"The stronger print has all but assured the Bank of England will hold rates steady on Thursday," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

"Investors are now in wait-and-see mode, watching whether the labour market cools in the wake of the Budget, with February's rate cut prospects looking like a coin toss."

In economic news, German business sentiment deteriorated in December, according to a survey released by the Ifo Institute.

The business climate index fell to 84.7 from 85.6 in November, missing consensus expectations for it to remain unchanged and hitting the lowest level since May 2020.

The current assessment index ticked up to 85.1 in December from 84.3 the month before, while the expectations gauge slumped to 84.4 from 87.0. Ifo Institute president Clemens Fuest said: "The weakness of the German economy has become chronic."

In equity news, Bunzl shares slid after the company released a trading statement saying revenues would rise but would be held back by inflation and weaker volumes.

Reporting by Frank Prenesti for Sharecast.com