Europe midday: Stocks pare back losses after Fed-inspired sell-off

European stocks pared back losses by lunchtime as the US Federal Reserve-inspired sell-off eased.

The pan-European Stoxx 600 had was down 0.85% having been lower by more than double that figure in early trade. European bourses were all in the red, with Milan's MIB and France's CAC-40 still off by more than 1%.

In London, the FTSE 100 was down 0.3% at 6,747.12, while the pound was up 0.6% against the dollar at 1.2683 and down 0.1% versus the euro at 1.1073 after the BoE left interest rates unchanged at 0.75%, as expected, amid growing Brexit uncertainty. The decision was unanimous.

The BoE also trimmed its forecast for British quarterly economic growth in the last three months of 2018 to 0.2% from 0.3%.

"The broader economic outlook will continue to depend significantly on the nature of EU withdrawal,” the meeting minutes said. "The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction."

Overnight, the Fed defied President Donald Trump and raised key lending rate rates by 0.25% to a range of 2.25 – 2.50%.

It said “some further” rate hikes would be necessary in the year ahead and expected two rises in 2019 instead of three forecast in September.

The Fed also cut its GDP growth estimate for this year by 0.1 percentage points to 3%, while the 2019 growth outlook was reduced by 0.2 percentage points to 2.3%.

US stocks recorded heavy losses after the announcement, falling to a 15 month low.

Citing an editorial in the Wall Street Journal calling for a pause in rises, Trump had piled on the pressure on Tuesday, warning the central bank to avoid making "yet another mistake".

Trade, home and car sales have all fallen as a result of Trump's international tariff wars as they are sensitive to higher interest rates.

In corporate news AstraZeneca was in the red even as the pharmaceuticals giant said two clinical trials of its Roxadustat drug showed positive results for the treatment of patients with anaemia in chronic kidney disease.

Shares in sector peer Indivior rose as the company announced the publication of the study design and participant characteristics of the ‘RECOVER’ (Remission from Chronic Opioid Use-Studying Environmental and Socio-Economic Factors on Recovery) study in the ‘Contemporary Clinical Trials’ journal on Thursday.

Oil giants BP and Shell were both lower as oil prices resumed their drop amid worries about oversupply.