European shares lost ground on Thursday after the U.S. Federal Reserve’s policy announcement the prior day fell short of expectations, while mining shares slumped following weak China manufacturing data.
The Stoxx Europe 600 index (XX:SXXP) -0.55% lost 0.6% to 248.11, set to break a four-day winning streak.
In recent days, European shares have moved higher on hopes central banks would act to curb the sovereign-debt crisis and boost economic growth, with investors particularly focused on a policy announcement late Wednesday from the Fed. The central bank, however, failed to meet market hopes as it didn’t announce another round of quantitative easing, but said it would expand its program to replace short-term bonds with longer-term debt by $267 billion through the end of 2012. The program is known as “Operation Twist” and was set to expire this month.
Banks erased parts of recent gains, with heavyweight HSBC Holdings PLC (UK:HSBA) -0.71% HBC +0.68% off 0.9% in London. Lloyds Banking Group PLC (UK:LLOY) -1.22% LYG +1.04% shed 0.7%, while Standard Chartered PLC (UK:STAN) -0.87% fell 0.8%, adding pressure to the FTSE 100 index (UK:UKX) -0.60% which lost 0.5% to 5,594.27, according to data compiled by Market Watch.
Miners also weighed, in the wake of further weakening in Chinese business activity, as a preliminary reading of HSBC’s Purchasing Managers’ Index dropped to a seven-month low in June.
Vedanta Resources PLC (UK:VED) -2.91% gave up 3.1%, Antofagasta PLC (UK:ANTO) -1.43% slipped 2.5% and BHP Billiton PLC (UK:BLT) -2.05% BHP -0.42% fell 2.2%.
In France, the world’s largest steel company ArcelorMittal SA (FR:MT) +2.47% declined 2.8%, weighing on the CAC 40 index (FR:PX1) -0.57% — off 0.5% to 3,110.58.
German shares also headed lower, with industrial conglomerate ThyssenKrupp AG (DE:TKA) -2.82% down 1.5% and truck maker MAN SE (DE:MAN) -2.33% 1.4% lower. The DAX 30 index (DX:DAX) -0.68% slipped 0.6% to 6,352.29.
Elsewhere, Royal KPN NV (NL:KPN) -2.25% dropped 2.7% after UBS cut the stock to neutral from buy.
