European Factors to Watch-Shares to fall on Fed shift in rates stance
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LONDON, March 20 (Reuters) - European stocks were set to open lower on Thursday, tracking U.S. and Asian shares lower after the U.S. Federal Reserve indicated that it could start to raise interest rates much earlier than expected.
Fed Chair Janet Yellen sent U.S. stocks and bonds tumbling after she suggested that interest rates could rise by mid-2015, pointing to a more aggressive path toward higher interest rates than many had anticipated.
Yellen also said the central bank could end its bond-buying programme this autumn. The Fed's easy policy stance of low rates and asset purchases has pushed many investors into equities.
Her statement came after the market close in Europe. The pan-European FTSEurofirst 300 held roughly steady on Wednesday, but was expected to drop on the open in line with Wall Street, which fell after the comments and set a negative tone for trading in Asia.
"Assuming a continuation in the current pace of tapering the bond buying program looks likely to end in Q4, and in answer to a question about when interest rates might rise the Fed chief suggested that a rise in rates might come as early as Q2 2015, much earlier than markets had expected," Michael Hewson, chief market analyst at CMC Markets, wrote in a note.
"Whether she intended to be taken so literally is open to debate but it was enough to prompt a sharp reversal, and as such we can expect to see a lower open in Europe this morning."
At 0726 GMT, futures for the Euro STOXX 50, Britain's FTSE 100 , Germany's DAX and France's CAC were down between 0.6 percent and 1.1 percent.
The FTSEurofirst 300 is currently up 1.6 percent this week, lifted by moves to ameliorate a recent crisis over the status of Crimea. However, it remains over 3 percent off its February high. Continuación...