(Reuters) – European shares fell on Tuesday as declines in cyclical stocks and UK’s British American Tobacco threw a spanner into a rally driven by optimism over a global recovery from the coronavirus crisis.
The pan-European STOXX 600 index fell 1.3%, with eurozone banks .SX7E down 5.6% after a six-day run of gains.
Shares in oil majors Royal Dutch Shell (RDSa.L), BP (BP.L) and Total (TOTF.PA) fell between 3.2% and 4.7% as crude prices pulled back on the spectre of persistent oversupply. [O/R]
Other sectors considered more economically sensitive such as automakers .SXAP, travel and leisure .SXTP and insurers .SXIP, which led a market recovery in the recent weeks, fell between 3.6% and 4%.
Dragging London’s FTSE 100 .FTSE lower, BAT (BATS.L) slid 3.5% after it cut annual targets, citing a demand hit from stricter lockdown measures in key emerging markets.
Meanwhile, investors also awaited the Federal Reserve’s two-day monetary policy meeting, set to conclude on Wednesday.
“Some of the moves were pretty crazy yesterday and we are keeping back a little. Maybe a bit concerned pre-Fed,” said Keith Temperton, a trader at Tavira Securities.
“My feeling is the Fed is not going to say or do anything. They’re probably going to reserve the next round of ammunition for potential damage from a second wave or if more lockdown is required.”
GRAPHIC: Europe, U.S. value stocks outperformance – .IXIC confirmed a return to bull market on Monday.
Healthcare stocks .SXDP were the sole gainers, rising 1.2%.
Among individual stocks, Telefonica Deutschland (O2Dn.DE) dropped 4.5% as it signed a deal to sell thousands of phone masts for 1.5 billion euros to Telxius Telecom.
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