European stocks dropped on Tuesday, as a jump in the euro cut into the value of equities, and as investors looked ahead to what the U.S. Federal Reserve will say about the pace of growth in the world's largest economy. The Stoxx Europe 600 SXXP, -1.49% fell 1.5% to 406.28, with only the energy SXEP, -0.08% and utilities sectors ending higher. In Paris, the CAC 40 PX1, -1.81% fell 1.8% to 5173.38. In Madrid, the IBEX 35 IBEX, -0.28% fell 0.3% to 11,811.66. In Frankfurt, Commerzbank CBK, -1.62% shares were driven down 5.7%. Their worst session since March 2014 came as the German lender late Monday launched a share sale in an effort to raise €1.4 billion from institutional investors. Commerzbank shares weighed on Germany's DAX 30 DAX, -1.89% which fell 1.9% to 11,811.66. The slide in European equities followed Monday's jump of 1%, which came following reports the team negotiating on behalf of debt-strapped Greece with its international creditors was reshuffled. "Markets are becoming increasingly cautious as the key [Federal Reserve Open Market Committee] meeting begins to dominate the thoughts of traders," wrote Richard Perry, market analyst at Hantec Markets, early Tuesday, noting that U.S. stocks on Monday finished lower. Losses SPX, +0.30% extended into Tuesday's session. Fed policy makers will begin meeting later Tuesday and assess what's been a patch of weaker-than-expected U.S. economic data. Speculation that a run of soft economic data may keep the Fed from signaling a June interest-rate rise has pushed the dollar DXY, -0.75% lower against its rivals, including the euro. The euro EURUSD, +0.81% rallied about 1% against the greenback Tuesday, trading at $1.0987. Ashraf Laidi, chief global strategist at City Index, noted the euro began pushing higher late Monday as the shuffle in Greece's debt-talks team appeared to reduce the influence of Greece's outspoken finance minister, Yanis Varoufakis. That move "may pave the way for the much-needed resolution in the negotiations," for Greece, Laidi said. But the euro's gain against the greenback "starts to remove some of that euro-premium that's been enjoyed by European bourses," particularly the German DAX, he said. Laidi said the euro may pushing higher if the Fed indicates it won't raise rates in June, and that in turn could put further pressure on the DAX, which is down 1.3% this month. It's still up 20% so far this year. "From a technical point of view, the DAX is more worrisome for me. It's more susceptible to a downside than U.S. stocks," he added. U.K.: In the U.K., first-quarter gross domestic product grew at a slower-than-anticipated pace. The U.K.'s FTSE 100 UKX, -1.03% finished 1% lower at 7,030.53, but the pound GBPUSD, +0.54% recovered from a brief selloff, surging to $1.5330, from $1.5225 just ahead of the GDP report. Sterling gained as traders switched focus to the "clear divergence between the U.K. and the U.S." in monetary policy, said Angus Campbell, senior analyst at FxPro. Read: Weak U.K. GDP hurts Tories chances ahead of election In London, BP PLC BP., -0.17% BP, +0.98% shares turned lower by 0.2%. The shares had risen earlier after the British oil major's underlying replacement-cost profit for the first quarter came in at $2.58 billion, well above an expected $1.28 billion. Greece: In Athens, the Athex Composite GD, +1.41% ended 1.4% higher at 806.01. Meanwhile, bond yields fell as prices climbed. The yield on two-year debt dropped 2.4 percentage points to 19.8%, and 10-year bonds were yielding 10.8%, down 77 basis points. In his first major TV interview since being elected in January, Greek Prime Minister Alexis Tsipras late Monday reportedly said he expects an agreement on an Greek economic reform program to be hammered out before May 9, which would end a two-month deadlock in negotiations with its international creditors. Source: MarketWatch
