European shares set to end three days of gains as banks, energy stocks fall

LONDON - 17 August 2017: European shares edged lower in early deals on Thursday, set to break their three-day winning streak as banks fell following a set of cautious minutes from the U.S. Federal Reserve, and energy stocks also weighed.

The pan-European STOXX 600 index was down 0.3 percent, as were euro zone blue chips.

Britain's FTSE 100 fell 0.2 percent, while Germany's DAX was 0.1 percent weaker.

Minutes from the Federal Reserve's latest meeting showed that policymakers were growing more cautious about recent weak inflation, with some calling for a pause in interest rate hikes until it was clear the trend was transitory.

European banks, which benefit from higher interest rates, were among the worst-performing sectors, down 0.8 percent with Standard Chartered, Deutsche Bank and Credit Suisse all down more than 1 percent.

Energy stocks, the worst-performing European sector so far this year, were also down 0.7 percent, though basic resources were a bright spot, gaining 0.3 percent as metals prices rose.

Earnings updates were once again in focus, with Swiss toilet and plumbing supplies maker Geberit tumbling 5.6 percent after posting weaker-than-expected second quarter results, closely followed by falls in Hikma and Vestas Wind, which also dropped after their updates.

Results boosted shares in Danish hearing aid producer GN Store Nord 6.5 percent, while Qinetiq Group rose after Barclays upgraded it to "overweight".

So far 85 percent of MSCI Europe firms have given second-quarter updates, of which 60 percent have either met or beaten analysts’ expectations, according to Thomson Reuters data.

Overall, this points to earnings growth of more than 24 percent for the quarter, compared with the same period last year.