European stocks retreated for the first time in four days Tuesday, as investors paused for breath ahead of the Federal Reserve's decision on its key interest rate, with mining and telecoms stocks coming under pressure, according to AP. The U.K.'s FTSE 100 Index lost 0.7 percent to 6,659, while France's CAC-40 Index dropped 0.6 percent to 5,803.93. Germany's DAX Index fell 0.4 percent to 7,977.9. «Investors are hesitant ahead of the Federal Reserve's decision tomorrow,» said Oliver Russ, manager of the Argonaut European Income Fund. «Despite appearances, confidence is still quite fragile. I don't think the Federal Reserve would risk not acting.» While analysts say expectations of a minimum quarter-point cut by the Fed are largely priced into the market, there is some concern that it may choose not to act at all, or may indicate a less accommodative policy going forward. David Brown, chief European economist at Bear Stearns, expects a quarter-point cut and said the accompanying rhetoric will be in focus. «The key is how much they are reading into the current situation that the market may not see. The statement is critical in terms of whether the Fed will shift to a more balanced stance, or leave the door open for further cuts,» he said. However the mining sector, where an interest-rate cut would help prop up demand for metals, retreated from its recent upward trend as metal prices, including aluminum, silver and gold, dropped. Spot gold traded at $783.6 a troy ounce, down 1.4 percent from the 28-year high set Monday. Aluminum producer Norsk Hydro's third-quarter results disappointed investors, as it reported a 5 percent decrease in earnings before taxes and interest. Its shares fell 4 percent. London miner Vedanta Resources fell almost 5 percent on concerns that a stronger rupee and weak copper treatment and refining charges would stop the company meeting expectations at its Nov. 15 update. Vedanta declined to comment, but broker Citigroup cut its 2008 EPS forecast by 5.9 percent. ArcelorMittal lost 2.4 percent and miner Anglo American fell 2.8 percent. The telecommunications sector came under pressure following Dutch telecom company's KPN's results, in which third-quarter profit fell below analysts' expectations. KPN shares fell 5.4 percent, with France Telecom losing 1 percent and Telecom Italia dropping 0.4 percent. German chemical maker BASF added to the earnings disappointment, and its shares lost 2.5 percent following its third-quarter results and its warning that plant turnarounds will reduce fourth-quarter earnings. Both German tire maker Continental and French peer Michelin's third-quarter results fell short of investor expectations. Continental dropped 1.9 percent and Michelin lost 4.6 percent.
