European stocks steady as investors anticipate Fed meeting

European stocks steady as investors anticipate Fed meeting

European equities held near record highs and bond markets were steady as traders awaited a decision from the US central bank about how quickly it would scale back its substantial pandemic-era monetary stimulus.

The Stoxx Europe 600 share index opened flat, after hitting all-time highs earlier in the week as investors cheered earnings updates that signalled large companies were managing inflationary pressures. London’s FTSE 100 drifted 0.1 per cent lower.

Futures markets tracking the US’s broad-based S&P 500 dipped 0.1 per cent lower after the share index closed at record highs for the four previous sessions.

Headline inflation in the US is running at more than 5 per cent, while improvements in the world’s largest economy from the shocks of 2020 are expected to prompt the Federal Reserve to declare it can now shrink its crisis-era spending that has lowered borrowing costs since March last year.

Government bond markets have whipsawed in the past two weeks as traders speculated about how quickly the central bank planned to reduce its monthly purchases of $120bn of Treasury notes and mortgage-backed securities, and whether the so-called tapering would be a precursor to interest rate rises next year.

“Investors are using the bond markets to play out their central