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TheStreet Open House

The Deal: European Shares Fall Ahead of Fed Meeting

LONDON (The Deal) -- European stock indices reversed course after Monday's rally and Asian indices closed largely lower ahead of the start of the Federal Reserve's policy meeting later Tuesday.

Investors worldwide are on tenterhooks to see whether policymakers will pare back the central bank's $85 billion monthly bond buying program.

In London, the FTSE fell 0.49% to 6,490.17. The Office for National Statistics said consumer price inflation slowed in November to 2.1% thanks to declines in food and utility prices. That rate fell just below consensus forecasts and was down from an annual rate of 2.2% the month before. The decline takes it closer to the Bank of England's elusive 2% target rate.

Eurozone consumer price figures released separately showed that the November annual inflation rate was 0.9%, up from 0.7% in October. Month-on-month prices slipped 0.1%, matching forecasts. But Germany's closely watched ZEW index of  financial market protagonists' economic expectations exceeded forecasts significantly, with a  reading of 62.0 in December, up from 54.6 the month before. The result was the strongest since April 2006.

In Frankfurt, the DAX index fell 0.43% to 9,124.14, while in Paris the CAC 40 fell 0.95% to 4,080.90.

RSA Insurance Group was one of the few gainers in London as investors bet that Standard  & Poor's decision Monday to cut the company's rating may trigger asset sales or even a sale of the whole company. Fitch Ratings had earlier Monday put the business on review for a downgrade. RSA said the Standard & Poor's action would have little impact on its business. On Friday. the insurer launched a root-and-branch review after it delivered its third profit warning in six weeks.

In Sydney, Saputo fired a new shot in a three-way takeover battle for Australia's Warrnambool Cheese & Butter Factory Holdings. The Canadian bidder lifted a cash offer to as much as A$537.3 million ($480 million), provided it receives acceptances from 90% of shareholders. Saputo is competing with Bega Cheese  and cooperative Murray Goulburn Co-operative Co. and revised its most recent bid after the complex structure incurred the wrath of Australia's Takeovers Panel. Warrnambool closed at A$9.27, more than double its undisturbed share price as of early September.  Saputo's offer is worth A$9.00 per share, rising to A$9.60 in the unlikely event it secures a 90% holding; the two rival bidders hold a combined 35% stake.

In Tokyo, the Nikkei 225 closed up 0.83% at 15,278.63, while in Hong Kong the Hang Seng slipped 0.20% to 23,069.23, with mainland Chinese indices posting larger losses.

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