Europe stocks mainly drop before expected Fed hike

LONDON - European stock markets mostly dipped on Wednesday, with investors on edge before another widely-expected jumbo interest rate hike from the US Federal Reserve.

London equities slipped on the eve of another expected large rate increase from the Bank of England.

In the eurozone, Frankfurt fell but Paris rose following weak eurozone manufacturing survey data and a dip in German exports.

"All eyes will be on central banks on both sides of the Atlantic as both the US Federal Reserve and BoE get ready to deliver their rate decisions over the next 24 hours or so," said AJ Bell investment director Russ Mould.

"While we have a good idea of the quantum of increase both parties will deliver, it will be all about the mood music."

Global central banks have this year ramped up borrowing costs in an attempt to curb inflation, which has rocketed on sky-high energy costs arising from Russia's war on Ukraine.

Economists fear that rising rates will spark a global economic downturn because they ramp up loan repayments for individuals and businesses, thereby denting consumer spending and investment.

Wednesday's Fed decision is hotly anticipated by traders hoping for a hint from officials that they are ready to temper their speed of monetary tightening.

"Investors are waiting for clues from the Federal Reserve about the path of rate rises, and in the meantime a slightly more wary mood has settled on the markets," added Hargreaves Lansdown analyst Susannah Streeter.

"The Fed is expected to bring in another super-size rate hike of 0.75 percentage points."