European shares edge lower as Fed curbs stimulus bets

Reuters

LONDON, Oct 31 (Reuters) - European stocks edged lower onThursday after the U.S. Federal Reserve took a more hawkish tonethan the market had anticipated, raising the chances thatstimulus may be scaled back earlier than previously expected.

The Fed kept its $85 billion-a-month stimulus plan as themarket widely expected, but did not sound as alarmed about thestate of the economy than some had anticipated, removing areference to tighter financial conditions.

U.S. stocks sold off slightly after the announcement, whichwas seen as increasing the odds that the Fed will start reducingits equity-friendly asset purchase programme earlier than March,the consensus expectation before the Fed's meeting.

"We're going to see traders ... take profit," said FarhanAhmad, a trader at Tradenext, adding he would need to see a 10percent drop in major indexes before becoming a buyer again.

"The economic data from the U.S. and from Europe says (theeconomy) is still licking its wounds, so I would like to see abigger drop than most people expect."

At 0801 GMT, the pan-European FTSEurofirst 300 index was down 0.3 percent at 1,284.37 points, furtherretreating from a five-year high hit the previous day.

Corporate results added to the negative market tone asheavyweight stocks such as oil major Royal Dutch Shell and L'Oreal missed consensus forecasts.

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