Chipmakers, banks prop up European stocks after Fed cools mood

PDVSA, Venezuela

FILE PHOTO: The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 21, 2018. REUTERS/Tilman Blasshofer (Reuters) – European stock markets fell early on Wednesday, as bets on an aggressive half-point cut in U.S. interest rates collapsed following Wednesday’s message from Federal Reserve, soothed in part by strong results from chipmaker Micron Technology.

Fed Chair Jerome Powell said on Tuesday the central bank is “insulated from short-term political pressures”, pushing back on pressure from President Donald Trump to cut interest rates and saying a cut next month is not locked in.

Markets still firmly expect the U.S. central bank to ease policy but comments from Powell and others were enough to weaken bets on the decisive new support for growth that has driven stock markets steadily higher this month.

The pan-European STOXX 600 index fell 0.3% by 0706 GMT. Banking stocks, which unlike consumers, retailers or manufacturers tend to benefit from higher interest rates, outperformed.

Micron’s better-than-expected results overnight supported semiconductor companies globally, with European players Infineon, Siltronic, Dialog Semi and AMS all up between 0.6% and 1.3%.

Thyssenkrupp gained 3%, and was among the biggest gainers on the main index, on a report of a possible takeover offer by Kone for the German company’s elevator business.

Reporting by Amy Caren Daniel in Bengaluru; editing by Patrick Graham