By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets dropped Friday, after the Federal Reserve signaled it would slow down or halt its bond-purchasing program before the end of 2013.
The Stoxx Europe 600 index XX:SXXP -0.14% lost 0.3% to 286.04, setting it on track to break a three-day winning streak.
Shares of Fresnillo PLC UK:FRES -5.49% slumped 5.8%, after UBS downgraded its rating on the precious-metals firm to neutral from buy.
On a more upbeat note, BP PLC BP +2.00% UK:BP +1.70%
rose 1.5%, extending a 2.4% advance on Thursday, when Transocean Ltd. RIG +6.40% agreed to pay a total of $1.4 billion in civil and criminal fines in relation to the disastrous 2010 rig explosion in the Gulf of Mexico. See: Transocean reaches Deepwater Horizon settlement
BP was leasing the Deepwater Horizon drilling rig from Transocean at the time of the disaster. Analysts at Exane BNP Paribas said they see the settlement as “having a positive read-across for BP.”
Fed meeting minutes
Helping set the tone for the broader stock market, investors looked to the U.S., where the Federal Reserve had the effect of pouring cold water on the rally of recent days.
On Thursday, minutes from the Federal Open Market Committee’s meeting in December showed that “several” officials thought the central bank would slow down or halt its program of bond purchases, also known as quantitative easing, in 2013. See: Fed sees bond buying ending this year
Financial markets “had seemingly become too preoccupied with the sheer scale of the program and lost sight of the timing of the eventual exit, which may now come earlier than previously anticipated,” analysts at Danske Bank said in a note.
“This underlines that while the U.S. debt ceiling could be an occasional show stopper for risk in Q1, an even greater one, i.e. speculation on Fed exiting QE, could be in store for Q2,” they added.
Investors will focus attention on the U.S. labor market when the nonfarm-payroll report for December is released at 1:30 p.m. London time, or 8:30 a.m. Eastern. See: How to read ‘quirky’ December jobs report
U.S. stock futures pointed to a flat open on Wall Street. See: Stock futures steady as investors eye payrolls
Back in Europe, economic data showed the euro zone’s downturn eased in December. The final purchasing managers’ index reading rose to a nine-month high of 47.2 from 46.5 in November, but came in below an earlier estimate of 47.3.
Germany’s composite PMI rebounded into positive territory at 50.3, while France, Italy and Spain remained in contraction. See: Euro-zone PMI signals downturn eased in December
Movers
Mining shares ranked among Friday’s biggest decliners in Europe, as metals prices dropped across the board. See: Gold, silver futures tumble after Fed minutes
In London, Rio Tinto PLC UK:RIO -1.83% RIO -2.40% AU:RIO -1.01% lost 1.7%, while fellow heavyweight .BHP Billiton PLC UK:BLT -1.23% BHP -1.13% AU:BHP -0.63% fell 1.3%.
The FTSE 100 index UK:UKX +0.01% eased 0.1% to 6,040.93. See: miners push London stocks lower; BP rises.
In Paris, shares of steelmaker ArcelorMittal SA FR:MT -1.43% gave up 1.4%, while banks Société Générale SA FR:GLE -1.03% and BNP Paribas SA FR:BNP -0.42% lost 1.1% and 0.7%, respectively.
The CAC 40 index FR:PX1 -0.33% fell 0.4% to 3,704.71.
And in Frankfurt, the DAX 30 index DX:DAX -0.16% shed 0.3% to 7,736.47.
Shares of Bayer AG DE:BAYN +0.65% rose 0.4%, as the drug maker said it got the regulatory clearances to complete the takeover of the U.S.-based animal-health business of Teva Pharmaceutical Industries Ltd. TEVA +1.18% . See: Bayer cleared by US to buy Teva animal-health unit
Outside the major indexes, shares of Sonova Holding AG CH:SOON +2.01% climbed 1.9%, as Bank of America Merrill Lynch upgraded its rating on the hearing-aid firm to buy from neutral.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
