(Reuters) -European shares dipped on Friday, rounding off a lacklustre week which saw investors step to the sidelines ahead of crucial updates from the U.S. Federal Reserve and the European Central Bank(ECB), while Croda slid on a tepid profit outlook.
The pan-European STOXX 600 index remained at 460.51 points by 0817 GMT, and was set dip 0.4% for the week.
Investors feared that the Fed could opt for a hawkish stance in its meeting next week, while the ECB is expected to continue to tighten its monetary policy.
Money markets now see a 73% chance that the Fed will skip raising interest rates in its June meeting but will resume rate hiking in July. For the ECB, traders see about a 98% chance of a 25 basis point rate hike next week.
“Our view on the Fed is that they want to pause… We do however, expect the Fed to keep the door open for another hike in July,” Mohit Kumar, a strategist at Jefferies said.
“ECB is in a slightly different position as we do not believe that it is in the ‘sufficiently restrictive territory’ yet. We expect a rate hike in June followed by another in July and that should mark the end of the current rate hiking cycle.”
Shares of Croda International tumbled 15.8% to lead losses in the STOXX 600 after the British chemicals company forecast its annual pre-tax earnings to come in below expectations.
The broader European chemicals index fell 1.9%, leading sectoral declines. Chemicals also fell the most among major European sectors for the week, down some 3%.
Among gainers, basic resources rose 0.8%. It was set to clock weekly gains of 2%, leading the advance.
Norwegian metal and renewable energy company Norsk Hydro (OTC:NHYDY) led gain on the index, to rise 1.8%. The company agreed to buy land in Spain for the construction of an aluminium recycling plant.
