European stocks tank on eve of Fed

LONDON: European stock markets dived on Tuesday on the back of dire corporate and economic news in the eurozone as investors waited to tomorrow's US Federal Reserve interest rate decision.

Frankfurt, London, Madrid, Milan and Paris each shed around two percent in midday deals, extending the previous day's losses, as dealers judged that recent gains were overdone despite easing coronavirus lockdowns.

The euro fell against the dollar as Fed policymakers prepared to start a two-day monetary policy gathering.

Oil prices retreated further on sceptisicm over a weekend deal to extend output cuts from key crude producing nations.

"Equity markets in Europe were lower again with investors looking ahead to the Federal Reserve two-day meeting, which starts today," said analyst Neil Wilson at trading site Markets.com.

"Some big names in France -- Airbus, Safran, Thales, and Dassault -- turned sharply lower even as the French finance minister unveiled a 15-billion-euro support plan for the aerospace industry."

In another blow to sentiment, the Bank of France predicted the French economy would shrink by about 10 percent this year on the fallout from COVID-19, before recovering to pre-crisis levels by mid-2022.

In Europe's biggest economy Germany, exports tumbled 24 percent month-on-month in April to 75.7 billion euros ($85.5 billion), official data showed.

Tuesday's round of heavy European losses came after Tokyo ended a six-day winning streak.

Nevertheless, Asian equities mostly rose as long-running optimism over the re-opening of economies eclipsed early profit-taking.

Sydney and Hong Kong were the standout performers, with traders picking up the baton from Wall Street where the Nasdaq ended at a record high and the S&P 500 wiped out all its losses for the year so far.

There were warnings, however, that the Asian gains -- which have seen markets soar from their March trough thanks to the lockdown easing and massive stimulus -- may have also gone too far.

Nevertheless, Hong Kong rallied 1.1 percent and Sydney jumped more than two percent as investors there returned from an extended weekend break to play catch-up with Monday's regional advance.

Seoul rose 0.2 percent despite geopolitical concerns re-emerging after North Korea said it was severing all communication links with the South.

Key figures around 1100 GMT

London - FTSE 100: DOWN 1.8 percent at 6,356.82 points

Frankfurt - DAX 30: DOWN 2.0 percent at 12,568.96

Paris - CAC 40: DOWN 1.9 percent at 5,078.93

EURO STOXX 50: DOWN 1.7 percent at 3,310.06

Milan - FTSE MIB: DOWN 2.1 percent at 19,808.93

Madrid - IBEX 35: DOWN 2.2 percent at 7,726.50

Tokyo - Nikkei 225: DOWN 0.4 percent at 23,091.03 (close)

Shanghai - Composite: UP 0.6 percent at 2,956.11 (close)

New York - Dow: UP 1.7 percent at 27,572.44 (close Monday)

Euro/dollar: DOWN at $1.1257 from $1.1294 at 2100 GMT

Dollar/yen: DOWN at 107.91 yen from 108.43 yen

Pound/dollar: DOWN at $1.2638 from $1.2724

Euro/pound: UP at 89.09 pence from 88.77 pence

West Texas Intermediate: DOWN 2.4 percent at $37.29 per barrel

Brent North Sea crude: DOWN 1.8 percent at $40.06 per barrel