European stock market opens lower after Fed outweighed interest rate hikes

European stock markets opened lower on Thursday, as the impact on banks of an accommodative policy message from the U.S. Federal Reserve outweighed any broader lift to sentiment from its abandoning of further interest rate hikes this year.

The pan-European STOXX 600 index dipped 0.3 per cent, driven by falls in Paris, Madrid and Frankfurt that contrasted with a strong reaction on Asian markets to the Fed's statement and news conference. Germany's DAX led with a 0.5 per cent fall, weakened by a 1 per cent loss for bank stocks, which tend to suffer when expectations for future interest rates fall.

Banking shares across Europe had also risen earlier this week on signs of a merger between Deutsche Bank and Commerzbank. A bright spot was semiconductor makers, boosted by Micron Technology's upbeat outlook for the sector, which soothed worries about falling demand for smartphones. Infineon and STMicro were both up 2 per cent.

EssilorLuxottica's shares slumped to the bottom of the CAC 40 and the STOXX 600 on new tensions in its boardroom as the top shareholder and executive chairman accused the Franco-Italian group's executive vice chairman of a power grab. Investors punished HeidelbergCement, the world's second-largest cement maker, after its results and Swedish construction group Skanska fell 3.2 per cent after it said it would not reach a target for operating margins.

London's FTSE 100 index was the only index to buck the trend, gaining 0.3 per cent as miners benefited from higher copper prices on the back of a weaker dollar. The market's internationally-focussed blue chip stocks also tend to gain on falls for sterling, which was suffering again from Britain's failure to find a clear route out of the European Union before a March 29 deadline. Among its midcaps, a profit warning from British precision engineering group Renishaw Plc due to a slowdown in Asia drove its shares 14 per cent lower.

(With inputs from agencies.)