European stocks lost steam on Wednesday ahead of a US interest rate decision with banks and oil stocks leading the slide after Swiss investment banking giant UBS (NYSE:UBS) shocked investors with a $4bn writedown.
The surprise announcement, coming ahead of the Swiss bank's annual results on February 14, comes after a $10bn writedown on its troubled subprime mortgage portfolio last month. Its shares lost 1.6 per cent to SFr46.06
The news weighed heavily on troubled financial stocks with BNP Paribas down 1.1 per cent to EU66.83 and France's Natixis down 0.6 per cent to EU11.66.
The FTSE Eurofirst 300 closed 0.7 per cent lower at 1,329.30, while in Frankfurt the Xetra Dax shed 0.3 per cent to 6,875.35 and in Paris the CAC 40 fell 1.4 per cent to 4,873.57.
Many investors remained on the sidelines ahead of the US Federal Reserve's interest rate decision expected late in the day, with the market already pricing a 50 basis point cut.
The energy sector was in the spotlight with Iberdrola surging 3.6 per cent to EU9.56 after the FT reported that France's EDF and ACS, Spain's biggest construction company were in bid talks for the Spanish energy giant.
Galp Energia tumbled 4 per cent to EU15.15 after Iberdrola said it will sell its entire 4 per cent stake in the Portuguese oil and gas group. The placement is expected to be made at EU15 to EU15.40 per share, traders said.
Also in Portugal EDP Energias de Portugal (NYSE:EDP)failed to extend Tuesday's gains, closing 0.4 per cent lower at EU4.28. Its shares make headway earlier in the day ahead of the announcement of expected details for a listing of its renewables division and renewed hope for more M&A in the energy sector.
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