European stocks close lower as market uncertainty lingers; Sweden's Riksbank cuts rates

LONDON — European stocks closed lower Tuesday afternoon as market uncertainty over the economic outlook lingers.

The pan-European Stoxx 600 index provisionally closed 0.46% lower, with all but one sector — autos — and all major bourses trading in the red. Banks shed 1.25%, while oil and gas stocks fell 2.09%.

Shares in British telecommunications company BT tumbled, closing 6.39% lower, after rival network provider CityFibre said it had struck a deal to launch Sky broadband services on its network.

In central bank news, Sweden's Riksbank cut interest rates by 25 basis points to 3.5% from 3.75% and signaled two to three more rate cuts this year.

Jens Magnusson, chief economist at financial services group SEB, said the central bank was likely to look to the Federal Reserve for direction on the pace of policy easing.

"They don't want the rate spread to become too big," he told CNBC. "If the Fed continues on a more hawkish drive, then the Riksbank can't move on at full speed."

Global markets will now be focused on key Fed events this week. Minutes from the central bank's most recent meeting will be released Wednesday, before Fed Chair Jerome Powell's Jackson Hole, Wyoming, speech on Friday.

Both events could give investors more clarity on the outlook for interest rate cuts and what to expect at the Fed's next meeting. Fed futures funds pricing indicates a roughly 76% likelihood of central bank policymakers lowering rates by 25 basis points in September, per the CME FedWatch Tool.

U.S. stocks wavered in early trading Tuesday after the S&P 500 and the Nasdaq Composite notched their longest winning streaks of 2024 on Monday.

Asia-Pacific markets were mostly up on Tuesday, however, tracking Wall Street overnight, while investors also