Europe: Shares lower on US rate hike expectations, Alstom up

[MILAN] European shares fell on Monday as top Federal Reserve officials bolstered expectations for a US rate hike this year, while Alstom bucked the weaker trend after a contract win.

The pan-European Stoxx 600 index fell 0.2 per cent, giving up some of the gains seen in the previous session, while a holiday closure of UK markets kept activity low.

At the Fed's annual gathering for global central bankers on Friday, Fed Chair Janet Yellen said the case for a rate hike had strengthened, but while she gave no hints about timing, Fed vice chair Stanley Fischer said later her speech was consistent with expectations for possible rate increases this year.

Investors said Friday's US jobs report was now in strong focus for any further clues about whether the next US rate hike could come as early as September. Futures priced in a 33 per cent chance of a September hike, up from 18 per cent last week.

"The US non-farm payrolls report should deliver the final indicator for the market as to whether it has correctly priced in the probability of a September rate hike," analysts at BayernLB said in a note.

Europe's Stoxx 600 Oil & Gas index fell 0.6 per cent, one of the biggest sectoral decliners, weighed down by falls in crude oil prices. Shares in oil majors Total and Eni fell 0.9 and 1 per cent respectively.

Stada fell 0.3 per cent after activist investor Active Ownership Capital succeeded in persuading shareholders of Stada over the weekend to remove the company's supervisory board chairman in a voting marathon, but failed to install its own candidate.

Among gainers, Alstom rose 2.9 per cent after the French transport group signed a 1.8 billion euro (S$2.74 billion) deal to design and build 28 new high-speed trains for US rail operator Amtrak.

Sweden's Fingerprint Cards gained 4 per cent following a media report that its client was preparing a smart card launch in China.

REUTERS