European markets edge lower after Fed signals no more rate hikes this year; Deutsche Bank down 3%

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European stocks were slightly lower Thursday morning, after the U.S. Federal Reserve took a more accommodative stance at its policy meeting.

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The pan-European Stoxx 600 was down around 0.15 percent during early morning deals, with most sectors and major bourses in negative territory.

Europe’s banking index led the losses, down nearly 1 percent shortly after the opening bell. Germany’s two largest banks were the worst performers, amid concerns a Deutsche Bank and Commerzbank merger could pressure Deutsche to further shrink or even dispose of its U.S. business. Shares of both banks were down around 3 percent.

Meanwhile, mining stocks surged toward the top of the European benchmark. The basic resources sector jumped nearly 1.5 percent ahead of the resumption of U.S.-China trade talks next week. Antofagasta, Rio Tinto and Anglo American were all over 2.5 percent higher on the news.

However, President Donald Trump warned on Wednesday that Washington would be prepared to leave tariffs on Chinese goods for a “substantial period” to ensure Beijing’s compliance with any trade deal.

Looking at individual stocks, Britain’s Merlin Entertainments tumbled to the bottom of the index. Shares of the company fell more than 8 percent after Berenberg cut its stock recommendation to “sell” from “hold.”

On the data front, annualized U.K. retail sales figures for February will be released at around 9:30 a.m. London time. The Bank of England (BOE) is due to announce its latest interest rate decision at midday.

British Prime Minister Theresa May told the public on Wednesday that she is “on their side” amid Brexit negotiations, laying the blame for the country’s delayed exit squarely with Parliament.

The embattled prime minister said British citizens were “tired of infighting and political games” and it was “high time” U.K. lawmakers decided on the next steps.

Earlier on Wednesday, May had written to European Council President Donald Tusk to formally request to delay Brexit until June 30. Until the law is changed, Britain is scheduled to leave the EU next Friday.

Stateside, at the end of a two-day policy meeting on Wednesday, the U.S. central bank abandoned forecasts for any interest rate hikes this year amid signs of an economic downturn. The Fed also said it would halt the decline of its balance sheet in September.

Market participants were buoyed by the Fed’s dovish stance, but the reasons behind it caused some concern.

In Asia, MSCI’s broadest index of Asia-Pacific shares, excluding Japan, rose 0.5 percent. Markets in Tokyo are closed on Thursday for a public holiday.

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