Europe midday: Shares slip as Fed euphoria wears off

European shares were lower as investors digested a raft of rate decisions from central banks across the globe, while automakers fell sharply after Mercedes-Benz cut profit margins again.

The pan-regional Stoxx 600 index was down 0.58% to 518.74 having risen sharply on Thursday after the US Federal Reserve cut its benchmark rate by a bumper 50 basis points.

However, in the 24 hours since the UK, Norway, Japan and China all held rates steady.

US and Asian markets were up overnight.

"The post FOMC rally appears to be flagging according to European markets, with stocks giving back some of the gains seen yesterday," said Scope Markets analyst Joshua Mahony.

"The Fed’s decision to cut rates by 50-basis points has been warmly welcomed by markets, with the bank shifting towards a pro-growth stance after years of blindly trying to drive down price pressures at all costs."

"While markets will undoubtedly enjoy an underlying feeling of optimism that the data will gradually start to improve, the Q3 earnings season and US election do provide a potential reason for markets to adopt a more cautious approach."

In economic news, German industrial producer prices in August fell 0.8% year on year thanks to lower energy costs. However, they were up 0.2% on the previous month.

UK retail sales rose by a better-than-expected 1% in August, data from the Office for National Statistics revealed, but consumer confidence fell sharply in September, a long-running survey showed on Friday, despite the more stable economic backdrop, as people nervously wait on next month’s Budget.

The latest GfK Consumer Confidence Index came in at -20, a seven-point slide on August’s reading.

In equity news, automakers slumped, led by Mercedes-Benz, which cut its full-year profit margin for the second time in less than two months, after overall sales volume fell in China.

Shares in Porsche, BMW and Volvo all fell on the news.

Reporting by Frank Prenesti for Sharecast.com