European stocks dropped on Thursday, halting their two-week rally after the U.S. Federal Reserve sounded less dovish on policy as it ended its six-year bond-buying programme.
At 1126 GMT, the FTSEurofirst 300 index of top European shares was down 0.8 percent at 1,309.31 points, after rising nearly 9 percent since a 13-month low hit on Oct. 16.
As expected, the U.S. central bank on Wednesday ended its stimulative quantitative easing scheme, but a relatively hawkish tone to the accompanying statement prompted investors to rethink the consensus that the first U.S. interest rate hike would be late in 2015.
"This is a key step for the Fed, and despite market jitters in the short-term, it's a necessary move as the U.S. economy is in a pretty good shape," said Jeanne Asseraf-Bitton, head of global cross-asset research, at Lyxor Asset Management.
"The global economy doesn't need more liquidity at this point, it needs economic growth."
The Fed's bond-buying programme has been strongly supportive of risky assets such as equity markets worldwide in the past two years, with the FTSEurofirst 300 up about 40 percent since mid-2012.
European stock markets seen as the most risky took a beating on Thursday, with Spain's IBEX 2.3 percent lower, Portugal's PSI 20 down 2.7 percent and Greece's ATG down 3.9 percent.
Bucking the trend, shares in Alcatel-Lucent surged 11 percent after the telecoms gear maker said it squeezed out more costs to improve its gross profit margin to a better than expected 34 percent.
Renault also gained ground, up 2.6 percent after the automaker posted a rise in third-quarter revenue and upgraded its European auto market growth forecast for the full year.
So far in Europe's earnings season, 36 percent companies have reported results, of which 67 percent managed to meet or beat profit forecasts, and 59 percent met or beat revenue forecasts, according to Thomson Reuters StarMine data.
In absolute terms, profits are up 7.1 percent, while revenues are up 0.1 percent, highlighting the fact that Europe's earnings rebound has mostly been coming from cost cutting and lower financing costs.
Europe bourses in 2014: http://link.reuters.com/pap87v
Asset performance in 2014: http://link.reuters.com/gap87v
Today's European research round-up
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