By Shubham Batra and Shashwat Chauhan
(Reuters) -European shares closed lower on Wednesday as investors refrained from taking risks ahead of a key U.S. Federal Reserve interest rate decision that could mark the start of a monetary easing cycle in the world’s largest economy.
The pan-European index closed 0.5% lower, with the food and drink sector posting the biggest losses among major sectors, down 1%.
Shares of Italian spirits group Campari (LON:) fell 7.5% after CEO Matteo Fantacchiotti abruptly resigned after just five months in charge, with the company citing personal reasons for his departure.
The heavyweight healthcare sector index lost 0.7%, while Danish drugmaker Novo Nordisk (NYSE:) fell 2.4% after a report that its diabetes drug Ozempic is “very likely” among the next drugs to see price cuts in the United States .
All major European stock exchanges ended lower.
The focus remains on the expected start of policy easing by the US central bank, with a decision on interest rates at 6pm GMT. According to CME’s FedWatch Tool, money markets see a 53% chance of a 50 basis point cut.
“We expect the FOMC to cut by 25 basis points today. However, we recognize that the decision is a close call and will likely come down to boardroom discussion,” Goldman Sachs economists said in a note.
“We concede that there are some good arguments for a 50 basis point cut… but we would argue that it is not clear whether the Fed is actually behind the curve or even thinks it is behind the curve. ”
Meanwhile, data in Britain showed inflation held steady in August but accelerated in the services sector, which is closely watched by the Bank of England, raising expectations that the central bank will leave rates unchanged on Thursday.
The blue chip ended 0.7% lower, while the pound strengthened 0.3% against the dollar.
Among other stocks, Germany’s BASF gained 2.4% after a media report that the chemical company plans to prepare its agricultural chemicals business for an initial public offering in the coming years as part of restructuring measures to be announced this month.
France’s Ubisoft Entertainment rose 6.6% after BMO Capital Markets upgraded the stock’s rating to ‘outperform’, saying the shares are too cheap to ignore.
