European shares end down

European stocks closed lower yesterday in a broad-based late sell-off as US markets extended losses on concerns about the outlook for global interest rates.

Tyremakers Michelin and Continental slumped 2.6 per cent and 2.9 per cent respectively, taking a cue from a profit warning by Bridgestone, which cited the higher cost of raw materials. Continental, however, reaffirmed its full-year earnings targets.

The pan-European FTSEurofirst 300 index of blue chip shares fell 0.7 per cent to 1,269.9 points, below the day's high of 1,286.1 points.

The index has risen from a seven-month intraday low earlier this month but is still about 10 per cent below a near five-year high last month.

A stronger-than-expected Ifo survey of German business sentiment yesterday, along with recent comments from European Central Bank officials, boosted the prospects for higher rates in the euro zone and also affected markets.

The US Federal Reserve is expected to raise interest rates by 25 basis points to 5.25 per cent after its two-day meeting which starts today. It is also expected to raise rates again in August.

The Dow Jones industrial average and the Nasdaq index were both down 0.8 per cent.

"We expect a 25 basis points rate hike (to 5.25 per cent) and a statement leaving the door open for further action going forward," Morgan Stanley economists said in a note.

Around Europe, London's FTSE 100 index shed 0.5 per cent, and Paris's CAC-40 lost 0.6 per cent. Frankfurt's DAX fell 1 per cent, and Zurich's SMI fell 0.8 per cent.

Shares in oil companies ticked up, tracking a rise in U.S. crude prices to above $72 a barrel. BP gained 0.6 per cent and Royal Dutch Shell added 0.8 per cent.