Europe midday: Shares slide ahead of Fed; Vivendi surges

European shares were in the red on Monday as investors set themselves for a week of data dumps and interest rate calls, while they also digested mixed economic news from China.

The pan-regional Stoxx 600 index was down 0.3% at 514.90.

The US Federal Open Market Committee starts its two-day meeting on Tuesday, with expectations of a 25 basis point cut already priced in by markets.

"The Federal Reserve is expected to cut interest rates again, but a note of caution is expected to creep into comments from the chair Jerome Powell, with a more of a gradual reduction of rates next year, given the resilience of the economy and with some price rises remaining persistent," said Hargreaves Lansdown analyst Susannah Streeter.

Meanwhile there also decisions from the Bank of Japan and Bank of England on Thursday with expectations of no change on both counts. The People's Bank of China will announce its loan prime rates decision on Friday amid calls for greater stimulus to boost the country’s flagging economy.

Asian markets were broadly lower after the release of mixed economic prints from China, where industrial production grew in line with expectations in November, while retail sales missed forecasts and fixed asset investment growth disappointed.

On the economics front, eurozone business sentiment remained in the doldrums but there were signs of an easing of tougher conditions as the services industry returned to growth, according to preliminary survey data published on Monday.

The HCOB composite eurozone Purchasing Managers’ Index rose to 49.5 in December from 48.3 in the previous month and expectations of a slight fall to 48.2. A mark of 50 separates growth from contraction.

“The end of the year is somewhat more conciliatory than was generally expected. Service sector activity returned to growth territory and is showing a noticeable, if not exuberant, pace of expansion, similar to that seen in September and October,” said Hamburg Commercial Bank chief economist Cyrus de la Rubia.

“The manufacturing sector’s situation is still pretty dire. Output fell at a quicker pace in December than at any other time this year, and incoming orders were down too.”

In equity news, shares in French mass-media conglomerate Vivendi rallied to post a 37% gain as its newly spun-off entities Canal+, Havas and Louis Hachette Group started trading in London, Amsterdam and Paris respectively.

Shares in gambling outfit Entain fell after Australia's financial crime regulator started civil penalty proceedings related to alleged breaches of the country’s contraventions anti-money laundering and counter-terrorism law.

Reporting by Frank Prenesti for Sharecast.com