European stocks skid from one-month high as Fed underwhelms

(C) Reuters. The German share price index DAX graph at the stock exchange in Frankfurt

(Reuters) – European stocks fell from a one-month closing high on Thursday after an underwhelming response to the U.S. Federal Reserve’s pledge to keep interest rates low for a prolonged period.

The pan-European STOXX 600 (STOXX) dropped 1.1% by 0710 GMT, on course to break its four-day winning streak.

The U.S. central bank on Wednesday vowed to keep interest rates near zero until inflation is on track to overshoot the 2% target, as expected. However, Fed Chair Jerome Powell said an economic recovery is expected to slow, requiring continued support from further government spending.

U.S. tech stocks fell the most on Wednesday, while their European peers shed 1.6%. Banks (SX7P), automakers (SXAP) and miners (SXPP) were the biggest sectoral decliners in Europe, down nearly 2%.

Carmakers Volkswagen (DE:VOWG_p), Renault (PA:RENA) and PSA Group (PA:PEUP) fell between 2.5% and 3% after industry data showed new car sales fell by 17.6% in August.

Property firm Unibail-Rodamco-Westfield (AS:URW) slumped 8.5% as it announced a 9 billion euro plan that includes capital raise, to boost its balance sheet.