European Markets Dropped On Continued Fed Rate Hike Worries

(RTTNews) - The European markets ended the first session of the new trading week solidly in negative territory. The markets got off to a weak start Monday and remained locked in a sideways trend throughout the session. On a light day for global economic data, investors remained focused on the outlook for U.S. interest rates. The sharp sell-off on Wall Street at the end of the previous week and today's sharp drop in Asia had investors in a negative mood. Hawkish comments from Boston Federal Reserve President Eric Rosengren last Friday brought concerns about a near term rate hike back to the forefront.

Investors remain unsure what will occur at the Federal Reserve meeting next week. Traders will be paying attention to U.S. reports on retail sales, industrial production and consumer price inflation due this week for further clues to whether the Federal Reserve will hike rates at its Sept. 20-21 meeting.

Investors are also looking forward to the Bank of England meeting on Thursday and the upcoming BOJ meeting to see whether central banks have room for further stimulus measures should economic conditions deteriorate.

The Bank of England is unlikely to cut its key interest rate on Thursday, after reducing it to a record low last month, as recent data suggested that the economy is set to escape a recession after the initial 'Brexit' shock.

The Monetary Policy Committee is expected to hold its key bank rate at 0.25 percent and the quantitative easing at GBP 435 billion in the policy meeting on September 15.

The British Chambers of Commerce downgraded its growth projections for the U.K., citing weak consumer spending and a large reduction in investment.

Despite issues surrounding the Brexit, the U.K. is expected to skirt with, but avoid, recession, the business lobby said in its economic forecast released Monday.

The BCC forecasts the economy to grow 1.8 percent this year instead of 2.2 percent. The sequential growth in the third and fourth quarters of 2016 is forecast to slow down to 0.1 percent each.

The projection for 2017 was trimmed to 1 percent from 2.3 percent. If the forecast for 2017 is realized, it would be the weakest rate of growth since 2009, the lobby noted.

The 2018 outlook was downgraded to 1.8 percent from 2.4 percent.

The pan-European Stoxx Europe 600 index weakened by 1.02 percent. The Euro Stoxx 50 index of eurozone bluechip stocks decreased 1.32 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.89 percent.

The DAX of Germany dropped 1.34 percent and the CAC 40 of France fell 1.15 percent. The FTSE 100 of the U.K. declined 1.12 percent and the SMI of Switzerland finished lower by 0.70 percent.

In Frankfurt, Utility E.ON plunged 14.56 percent after completing the Uniper spin-off as planned. Peer RWE also lost percent.

Industrial gas maker Linde sank 7.29 percent after the industrial gas maker and Praxair Inc. agreed to terminate talks about a possible merger. French rival Air Liquide dropped 1.01 percent.

Commerzbank decreased 2.58 percent and Deutsche Bank forfeited 2.42 percent.

BMW dropped 2.22 percent and Daimler surrendered 2.05 percent. Volkswagen also finished lower by 1.52 percent.

In Paris, Sanofi fell 0.57 percent. The drug-maker and Verily Life Sciences, an Alphabet company, are planning to invest about $500 million in a diabetes joint venture combining devices with services.

BNP Paribas declined 2.20 percent and Societe Generale weakened by 1.84 percent. Credit Agricole also fell 1.58 percent.

Peugeot forfeited 1.78 percent and Renault decreased 1.50 percent.

In London, Associated British Foods plummeted 10.80 percent. The company warned that Primark's margins would be affected by currency movements following Britain's decision to quit the European Union.

Aberdeen Asset Management fell 1.66 percent. The company announced that it had been advised by the Financial Conduct Authority to increase the required minimum level of capital that should be held for regulatory purposes.

AstraZeneca rose 0.81 percent, after Jefferies upgraded its rating on the stock to "Buy" from "Hold."

Lloyds Banking Group declined 3.95 percent and Royal Bank of Scotland weakened by 3.43 percent. Standard Chartered surrendered 3.27 percent and Barclays fell 2.69 percent.