Europe midday: Stocks in the red as all eyes turn to the Fed

European equities dipped further by midday as investors priced in a dovish hike from the Federal Reserve later in the day.

The benchmark Stoxx Europe 600 index was down 0.51%, Germany’s DAX was off 0.26% and France’s CAC 40 was 0.62% weaker.

Meanwhile, oil prices retreated after the American Petroleum Institute said late on Tuesday that in the week ended 9 December, there was a 4.68m barrel build in US crude inventory levels, versus a 1.5m draw expected.

West Texas Intermediate was down 1.5% to $52.21 a barrel and Brent crude was 1.4% lower at $54.97.

IG chief market analyst Chris Beauchamp said: “Markets are trading in the red this morning, but only by a small amount, as investors ready themselves for the first US rate increase in a year. Having seen equities rally throughout the past month, the big question is now what will keep the surge going into 2017.

“So much has been baked into the price, both in terms of Fed policy and also the impact of the new administration, that investors are going to struggle to find a new narrative to drive everything forward. Unless Janet Yellen appears with a party hat on this evening and promises milk and honey for all, a day of reckoning could be at hand.”

The FOMC rate announcement is due at 1900 GMT, with a 25 basis points rate hike expected. US retail sales and industrial production are at 1330 GMT and 1415 GMT, respectively, while business inventories are at 1500 GMT.

On the data front, eurozone industrial production fell short of the consensus in October, according to figures released by Eurostat.

Industrial production in the 19 countries that share the euro was down 0.1% from September, when it was down 0.9%. Economists had been expecting a 0.2% rise.

On the year, industrial production in the euro bloc was up 0.6%, below expectations of a 0.8% rise.

In corporate news, Swiss biotech group Actelion was under the cosh after Johnson & Johnson ended talks with the company about a potential deal. However, Actelion said it was in talks with another party regarding a possible strategic transaction, with the Wall Street Journal reporting that it was France's Sanofi.

Italian broadcaster Mediaset rallied after Fininvest and Vivendi both upped their stakes in the company.

Dixons Carphone fell despite reporting a bigger-than-expected jump in first-half profits and upping its dividend as it said it was preparing for “more uncertain times ahead" as the UK exits from the EU.

Software product group Micro Focus International was in the black after reporting a rise in revenue and pre-tax profit for the first half.

Oil and gas services company Wood Group reversed earlier losses as it reaffirmed its full-year forecast for earnings before interest, taxes and amortisation but cautioned that market conditions are likely to remain challenging in 2017.

Metro AG was on the front foot after it reported better-than-expected fourth-quarter operating profit for the food and consumer electronics businesses it hopes to split in a demerger next year.

Zara owner Inditex fell despite reporting a 9% rise in nine month net profit with sales increasing by 11%.