European shares edge lower on Fed rate-hike bets
European shares edge lower on Fed rate-hike bets Updates prices; adds details and analyst comments
By Utkarsh Hathi and Johann M Cherian
June 18 (Reuters) - European shares edged lower on Thursday as investors increased bets on a Federal Reserve rate hike after policymakers struck a hawkish tone, though easing oil prices helped temper inflation concerns.
The pan-European STOXX 600 index .STOXX slipped 0.22% to 637.93 points by 0915 GMT, with basic resources .SXPP leading declines, down 1.8%.
An interim peace agreement between the U.S. and Iran to end the war and reopen the Strait of Hormuz - a key global oil shipping route, has brought a relief for markets in recent days, with oil prices falling to early-March levels, trading near $78 a barrel.
Energy price-sensitive airlines Lufthansa LHAG.DE and Air France AIRF.PA rose 1.7% and 3.1%, respectively.
In the U.S., the Fed held rates steady on Wednesday, but nine policymakers projected one rate hike this year. Traders see a 49.5% chance of a September increase and expect rates to remain unchanged thereafter through year-end, per CME Group's FedWatch tool.
"While we see headline inflation remaining elevated over coming months, we do not see second round effects feeding into core inflation," Mohit Kumar, an economist at Jefferies said.
"If oil prices remain contained, we do not see inflation expectations moving higher, hence our view of no change from the Fed over coming months."
The European Central Bank raised borrowing costs last week and traders anticipate another 25 basis point rate hike by year-end, according to LSEG-compiled data.
Meanwhile, Edenred EDEN.PA jumped 15% after a media report said Britain's BC Partners is weighing a takeover of the French voucher company.
Generali GASI.MI rose 1.3% after a report that UniCredit CRDI.MI is seeking to double its stake in the lender through Delfin, the Del Vecchio family holding company. UniCredit shares were up 0.3%.
EQT EQTAB.ST has reached an agreement to acquire UK's Intertek ITRK.L for about £10.6 billion ($14.10 billion). Shares of EQT were down 1.5%.
Among others, chipmakers Infineon IFXGn.DE and Aixtron AIXGn.DE gained 3.8% and 2.2%, respectively. Global tech shares in Asia surged and tech-heavy Nasdaq futures NQcv1 rose over 1.5% in the U.S.
Aircraft manufacturer Airbus AIR.PA rose 3.3% after Kepler upgraded the stock, while food retailer, Tesco TSCO.L slipped 2.7% after reporting a slowdown in first-quarter sales growth.
The IMK economic institute said Germany's economy will grow less than previously expected. The Bank of England is due to announce its rate verdict later this morning.
(Reporting by Utkarsh Hathi and Johann M Cherian in Bengaluru; Editing by Harikrishnan Nair and Nivedita Bhattacharjee)