By Carla Mozee, MarketWatch

European stocks slipped Tuesday, with investors appearing to hesitate after a tech-led selloff hurt the regional market in the prior session, and as financial markets prepare for a possible interest-rate hike by the Federal Reserve.

How markets are moving

The Stoxx Europe 600 index was off 0.1% at 373.45, backing off a rise of 0.3% earlier in the session. Only the basic materials and financial sectors held to higher ground while utility and telecom shares fared the worst. On Monday, the index slumped 1.1% (http://www.marketwatch.com/story/european-stocks-build-on-losses-as-micro-focus-shares-plunge-2018-03-19) and ended at its lowest since March 7, according to FactSet data.

Germany's DAX 30 turned lower and lost 0.1% at 12,204.71, and France's CAC 40 index gave up 0.2% to 5,212.92. The U.K.'s FTSE 100 index , meanwhile, was up 0.2% at 7,054.75. Spain's IBEX 35 fell 0.4% to 9,621.90.

The euro bought $1.2327, slightly lower than $1.2336 late Monday in New York. Against the pound, the shared currency was down roughly 0.2% at 0.8782 pound.

The pound jumped above $1.40 (http://www.marketwatch.com/story/pound-roars-back-above-140-after-eu-agrees-to-brexit-transition-deal-2018-03-19) and was recently at $1.4042 after the European Union agreed on the broad terms of a two-year transition period (http://www.marketwatch.com/story/eu-agrees-on-two-year-brexit-transition-deal-2018-03-19) for the U.K. when Brexit kicks in next year.

Check out:Pound could surge in 'frenetic' week of Brexit and BOE news, ING says (http://www.marketwatch.com/story/pound-could-surge-in-frenetic-week-of-brexit-and-boe-news-ing-says-2018-03-16)

What's driving markets

European stocks appeared largely to take their cue from U.S. stock futures , which began to drift lower, indicating Wall Street is setting up for another drop. Shares of Facebook (FB) and Oracle (ORCL) were down ahead of Tuesday's open after a slide in tech stocks . That led a selloff in the U.S. market on Monday that bled into European stocks.

Facebook Inc. (FB) , which is coming under official scrutiny over its use of member data.

Meanwhile, investors may be reluctant to take on significant risk before the Federal Reserve releases its policy decision on Wednesday, with markets pricing in a hike in rates by the central bank. The Fed will begin meeting on Tuesday.

Investors worldwide watch Fed rate policy, as higher U.S. interest rates can make riskier assets such as stocks less attractive -- and because many companies do business in the word's largest economy. Also this week, the Bank of England is expected to hint at a rate rise when its policy decision is released Thursday.

The euro and the pound retained much of their gains made Monday against the U.S. dollar after the EU and the U.K. agreed on the broad terms of a Brexit transition deal.

Read:Trump's most market-rattling trade blasts are still to come, warns Pimco (http://www.marketwatch.com/story/trumps-most-market-rattling-trade-blasts-are-still-to-come-warns-pimco-2018-03-16)

What strategists are saying

"Investors should not only be worried about the drop in Facebook equities, but also about FAANG stocks, which have been leading the bull market for many years," said Hussein Sayed, chief market strategist at FXTM, in a note. "Concerns that the European Commission will impose new taxes on tech firms in retaliation for U.S. steel and aluminum tariffs is an early indication that the trade war should be taken more seriously. If markets decided to turn on FAANG stocks, we would likely see a similar reaction to last February's correction," he said.

Don't miss: What to expect from the new Fed dot plot on interest rates (http://www.marketwatch.com/story/what-to-expect-from-the-new-fed-dot-plot-on-interest-rates-2018-03-16)

And read:It's time for stock-market investors to refocus on the Fed (http://www.marketwatch.com/story/now-its-time-for-the-stock-market-to-refocus-on-the-fed-2018-03-16)

Stock movers

Micro Focus shares (MCRO.LN) rose 3.2%, topping the Stoxx 600. The shares on Monday sank 46% for the software maker said CEO Chris Hsu has resigned (http://www.marketwatch.com/story/micro-focus-shares-slump-on-ceo-exit-revenue-warning-2018-03-19) and warned that revenue for fiscal 2018 will fall more than previously anticipated.

 

(END) Dow Jones Newswires

March 20, 2018 06:23 ET (10:23 GMT)

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