Europe midday: Stocks in the red as investors eye Fed rate announcement

European stocks were in the red as investors erred on the side of caution ahead of Wednesday’s rate announcement by the Federal Reserve.

At midday, the benchmark Stoxx Europe 600 index and Germany’s DAX were down 0.5%, while France’s CAC was 0.6% weaker.

“Equity markets are lower again today, but not by much. Investors have made their usual shift to the side-lines ahead of a Fed policy update,” said Mike van Dulken, head of research at Accendo Markets.

“While expectations for a rate hike have drifted well into 2016, we still don't anticipate any real commitment/news on timing. US data remains soft and central bank peers have already acted (PBoC), are expected to act this week (BoJ) or have moved markets with a gentle hint (ECB).”

On the corporate front, shares in chemicals group BASF fell after it cut its full-year earnings guidance on the back of weak sales in China, Brazil and other emerging markets.

Novartis was also lower 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.

GlaxoSmithKline was a touch weaker after announcing positive results from studies on its asthma treatment, Advair Diskus and Shingrix, its treatment for shingles, as results of a study on its losmapimod drug for heart treatment disappointed.

On the upside, oil giant BP rose. Although it posted a sharp fall in third-quarter underlying replacement cost profit to $1.82bn from $3.03bn the previous year, the results were better than expected.

Pharmaceuticals company Shire surged after saying its lifitegrast treatment for dry eye disease met its primary and secondary endpoints in a phase 3 study.

Earlier, 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.

Last week, ECB chief Mario Draghi struck a decidedly dovish tone, leading market participants to assume that the bank’s €60bn a month asset-purchase programme will be extended or increased in December.

Still to come on the macroeconomic front, US durable goods orders are at 1230 GMT, S&P Case/Shiller home prices are at 1300 GMT and consumer confidence is at 1400 GMT.