Europe close: Markets firmly in the red amid pre-FOMC jitters

European stocks declined on Tuesday, as investors erred on the side of caution ahead of Wednesday’s rate announcement by the Federal Reserve, while a raft of mixed economic reports from the US did little to lift the mood.

The benchmark Stoxx Europe 600 index closed down 1.06%, while Germany’s DAX fell 1.01% and France’s CAC was 1.02% weaker.

As of 1637 GMT, the euro was down 0.15% and 0.68% against the dollar and the yen respectively and gained 0.13% against the pound, while Brent crude fell 1.69% to $46.75 a barrel.

Mixed US data weighs on European stocks

On a relatively quiet day on the data front in the Eurozone, investors analysed a host of reports from across the Atlantic, as they highly-anticipated Federal Open Market Committee got underway on Tuesday.

According to the US Commerce Department, orders for long-lasting goods declined 1.2% in September compared with the 1.3% decline analysts had forecast but marking their second consecutive drop. August's reading was revised downward to show a 3% drop compared with the initial figure showing a 2.3% decline.

There was downbeat news on the consumer confidence front as well, as the index monitoring consumer sentiment declined from a downwardly revised 102.6 to 97.6 in October, compared with expectations for a 102.9 reading.

"Normally such dismal data would have been a big boost to the Dow, due to their rate-hike delaying capabilities," said Spreadex's financial analyst Connor Campbell.

"However, since it was already beyond unlikely that the Fed would choose to pull the lift-off trigger this month anyway, today’s economic bad news carried more weight than it traditionally has done for much of the year."

Meanwhile, the European Central Bank’s chief economist, Peter Praet, said there would be “no taboos” with regard to discussions about additional monetary loosening to push up inflation in the euro bloc.

In an interview with Agence France Presse, Praet said: "The governing council has given a very strong message: it is ready to draw the consequences of its assessment of the monetary policy stance.

Earnings in focus

In company news, shares in chemicals group BASF fell 4.78% after it cut its full-year earnings guidance on the back of weak sales in China, Brazil and other emerging markets.

Novartis slid 1.55% after the Swiss drug maker posted a 42% drop in third-quarter profit from the same period last year.

BG Group and Eni were under pressure following a report that Kazakhstan’s government is considering a penalty on a joint venture between the two that operates the nation’s second-biggest producing oil and gas field as the state looks for extra revenue to boost its finances.