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European Shares Seen Lower As QE3 Hopes Wane

European shares may edge lower on Wednesday, extending the previous session's losses, as the minutes of the latest monetary policy meeting of the U.S. Federal Reserve dashed hopes of further economic stimulus. U.S. stocks and Treasury prices dropped overnight after the release of the Fed minutes, commodities are retreating and Asian stocks are trading mostly lower in thin trading before the Easter holiday. Markets in China, Hong Kong and Taiwan are closed for holidays.

The minutes of the Fed's March meeting indicated that only two of the 10 members saw the case for another round of quantitative easing amid signs of improvement in the U.S. economy. This contrasts with the discussion in the minutes of the January meeting in which "a few members" believed that conditions could warrant additional securities purchases.

The ECB rate decision also comes into focus today, with many expecting that the central bank will hold interest rates at a record low of 1 percent, resisting German pressure to quickly get back to its anti-inflation mission and safeguard the stability of the euro currency.

In economic releases, a private sector gauge of inflation in the U.K. rose in March, thanks in large part to rising oil prices, which shot up 11 percent since the start of the year. The British Retail Consortium's shop price inflation index rose 1.5 percent year-over-year, with food prices rising 5.4 percent driven by transport and manufacturing costs, the BRC reported.

In corporate news, Roche Holding AG said in a letter to Illumina's shareholders that its increased offer for the maker of gene-mapping tools is full and fair and attractive "by every conceivable financial metric based on publicly available information."

Porsche announced March 2012 sales of 2460 vehicles in the U.S., down 5 percent from a year ago.

Volkswagen AG reported a 35 percent jump in its March U.S. sales, while the BMW Group reported 13 percent year-over-year growth in U.S. March vehicle sales to 29,806. Daimler said that sales of its Mercedes-Benz luxury brand rose 11 percent in March.

European shares ended a choppy session lower on Tuesday, as a lack of any significant news and continued fiscal worries concerning Spain and Italy prompted investors to pare positions ahead of the Easter holiday on Friday. On the same day, the U.S. employment report will be released despite the closure of stock markets for the holiday.

The Euro Stoxx 50 index of eurozone bluechip stocks fell 1.7 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.2 percent, while around Europe, the U.K.'s FTSE 100, Switzerland's SMI, the German DAX and France's CAC 40 ended down between 0.6 percent and 1.6 percent.

On Wall Street, stocks lost ground on Tuesday, with selling accelerating in the afternoon session after the Federal Reserve released the minutes of its latest monetary policy meeting. The Dow ended down half a percent, the tech-heavy Nasdaq slipped 0.2 percent and the S&P 500 slid 0.4 percent.

by RTTNews Staff Writer

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