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London - European stocks edged lower on Thursday after the US Federal Reserve took a more hawkish tone than the market had anticipated, raising the chances that stimulus may be scaled back earlier than previously expected.
The Fed kept its $85bn-a-month stimulus plan as the market widely expected, but did not sound as alarmed about the state of the economy than some had anticipated, removing a reference to tighter financial conditions.
US stocks sold off slightly after the announcement, which was seen as increasing the odds that the Fed will start reducing its equity-friendly asset purchase programme earlier than March, the consensus expectation before the Fed's meeting.
"We're going to see traders ... take profit," said Farhan Ahmad, a trader at Tradenext, adding he would need to see a 10% drop in major indexes before becoming a buyer again.
"The economic data from the US and from Europe says (the economy) is still licking its wounds, so I would like to see a bigger drop than most people expect."
At 10:01, the pan-European FTSEurofirst 300 index was down 0.3% at 1 284.37 points, further retreating from a five-year high hit the previous day.
Corporate results added to the negative market tone as heavyweight stocks such as oil major Royal Dutch Shell and L'Oreal missed consensus forecasts.
