(MENAFN- AFP) European stocks and the dollar slid Thursday after the Federal Reserve held interest rates and indicated it would take a slow, measured approach to any hikes.
Markets also digested a barrage of company results, including from Britain's Lloyds Banking Group, Rolls-Royce and Royal Dutch Shell, as well as France's Carrefour, BNP Paribas and Renault, and Germany's troubled Volkswagen.
London drifted 0.3 percent lower, while in the eurozone, Frankfurt dipped 0.2 percent and Paris lost 0.3 percent in value.
Tokyo led most Asian markets lower on worries over the size of the Bank of Japan's expected stimulus announcement due Friday.
In early morning London foreign exchange deals, the European single currency jumped to a near two-week dollar high at $1.1119.
- Greenback under pressure -
"The US dollar is sliding today despite some slightly hawkish shifts in the monetary policy statement last night, as the market was likely expecting more to suggest that a rate rise was imminent," said analyst David Cheetham at London brokerage XTB.
The Federal Reserve held borrowing costs overnight, but noted the world's top economy had improved and expressed less fear about the impact of Britain's vote to leave the European Union last month.
The meeting followed a string of positive readings -- particularly on jobs growth and key consumer spending -- that has fanned speculation of a tightening in monetary policy despite weakness in most other global economies.
"Whilst rate hikes are seen by many as negative for stocks, an increase at present from the Fed would represent a show of faith in the US economy," Cheetham told AFP.
"In raising the Fed funds rate by 25 basis points the central bank would be giving a vote of confidence to the economy and in doing so suggest that its robust enough to continue to perform well even in a higher rate environment.
"The lack of speed possibly reveals a lack of faith that the economy and markets can withstand a rate rise," he said, adding that this was weighing on sentiment.
In Frankfurt, Volkswagen shares went into reverse, dropping 1.9 percent to 125.30 euros after the scandal-struck German carmaker said second-quarter profits dived 57 percent to 1.15 billion euros ($1.3 billion).
Earnings were weighed down by almost 2.5 billion euros of special items, mostly related to 2015's diesel emissions cheating scandal.
In Paris, Carrefour topped the fallers board, shedding 4.1 percent to 22.73 euros.
The French supermarket giant said half-year net profits tumbled 40 percent to 129 million euros, hit by low fuel prices, currency fluctuations and restructuring costs.
Auto manufacturer Renault slid 2.6 percent to 77.54 euros, despite posting a record first-half net profit of 1.5 billion euros, up 7.5 percent from a year earlier on strong sales of new cars.
The group cautioned however that it was "much too early" to say what the impact of Brexit would be on the company.
- Lloyds bank axes jobs -
London's top faller was Lloyds Banking Group, which announced it will axe another 3,000 jobs by 2017, and partly blamed the low interest rate environment.
Lloyds saw its share price sink 4.9 percent to 53.03 pence.
Royal Dutch Shell also suffered after revealing that net profit collapsed in the second quarter on low oil prices, weak refining margins and production outages.
The British energy giant's 'B' stock slid 3.9 percent to 2,022.50 pence.
On the upside, however, shares in Rolls-Royce rocketed 13.3 percent to 829.50 pence.
Adjusted pre-tax profit tumbled almost 80 percent to £104 million in the first half on weak demand at its civil aerospace and marine divisions. However, that beat forecasts for a loss of £19 million.
"The reason behind the surge in price seems odd on first viewing ... but this is a classic example of low expectations being exceeded and causing a stock to rally," added Cheetham.
The strong yen sent Japan's Nikkei tumbling as the country's central bank began its own two-day policy meeting. Traders are worried the bank will not deliver Friday a big enough stimulus to kickstart the world's number three economy.
The Japanese government's announcement Wednesday of a 28 trillion yen stimulus -- without releasing details -- was unable to provide much excitement in Tokyo, where the Nikkei index ended 1.1 percent lower.
- Key figures around 1115 GMT -
London - FTSE 100: DOWN 0.3 percent at 6,729.90 points
Frankfurt - DAX 30: DOWN 0.2 percent at 10,298
Paris - CAC 40: DOWN 0.3 percent at 4,434.30
EURO STOXX 50: DOWN 0.9 percent at 2,971.90
Tokyo - Nikkei 225: DOWN 1.1 percent at 16,476.84 (close)
Hong Kong - Hang Seng: DOWN 0.2 percent at 22,174.34 (close)
Shanghai - Composite: UP 0.1 percent at 2,994.32 (close)
New York - DOW: DOWN less than 0.1 percent at 18,472.17 (close)
Euro/dollar: UP at $1.1102 from $1.1062
Pound/dollar: DOWN at $1.3179 from $1.3224
Dollar/yen: DOWN at 104.65 yen from 105.31 yen
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