Construction sector leads European share slide to 1-month low
European shares slipped to a one-month low on Wednesday as a lack of progress in resolving a US budget impasse prompted some investors to trim back positions in sectors such as construction.
The FTSEurofirst 300 index fell for a third straight day and was down 0.3 percent at 1,227.91 points by 0704 GMT, just off an intraday trough of 1,227.38, its lowest level since early September. The construction sector, meanwhile, was down 1.1 percent.
However, losses were limited on news that US President Barack Obama will announce later in the day the nomination of dovish Federal Reserve Vice Chair Janet Yellen to head the central bank.
If confirmed by the Senate, Yellen will replace Ben Bernanke whose second term ends in January. She has been a forceful advocate for aggressive action to stimulate the economy through low rates and bond purchases.
Yellen's nomination is certainly a good thing for the markets. She is one of the main supporters of a loose monetary policy and the markets will be assured that changes in the policy will be minimal, as long as underemployment persists," Koen De Leus, senior economist at KBC, in Brussels, said.
"However, markets are getting more nervous day by day. The longer the uncertainty of the debt ceiling and the government shutdown lasts, the more damage is inflicted to the economy."
Investors' focus remained on the U.S. budget talks that dragged on for a second week. Obama said on Tuesday he would be willing to negotiate budget issues with Republicans only if they agree to reopen the government and raise the debt limit.