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European follows U.S. stocks lower

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Investors focused on tariff and growth concerns

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Turkish assets drop after arrest of Erdogan rival

By Harry Robertson

LONDON, March 19 (Reuters) -

European shares slipped on Wednesday after a selloff on Wall

Street overnight, while the dollar ticked up from a five-month

low ahead of the Federal Reserve rates decision later in the

day.

Turkish stocks, bonds and the lira all slid, meanwhile,

after

Turkish authorities detained

President Tayyip Erdogan's main political rival on

Wednesday.

The pan-European STOXX 600 index was last down

0.1% after rising for the three previous sessions, boosted by

Germany's overhaul

of its debt rules to spend far more on defence and

infrastructure. Germany's DAX index was down 0.3% after

hitting a record high on Tuesday.

European stocks took their cue from Wall Street, where

equity indices fell on Tuesday as investors continued to worry

about a slowdown in growth stemming from tariffs.

The S&P 500 fell 1.1% and tech stocks were

particularly hard hit with the Nasdaq index falling 1.7%

on Tuesday. Futures pointed to a muted open on Wall Street on

Wednesday with S&P contracts ticking up 0.1%.

U.S. stocks have tumbled this year as U.S. President

Donald Trump's stop-start tariffs have

sown uncertainty

among companies, households and investors.

European shares have fared much better, thanks to plans

to ramp up defence spending in response to Trump's more

isolationist policies, the major fiscal changes in Germany, and

hopes of an end to the war in Ukraine.

Asian stocks struggled for direction overnight, with

Japan's Nikkei 225 index down 0.25% but China's CSI 300

inching slightly higher.

"There's still a continuation of the notion of a U.S.

growth slowdown relative to expectations," said Tim Graf, head

of EMEA macro strategy at State Street. "There's a realisation

that growth will probably get worse before it gets better."

Graf said the slight fall in European stocks on

Wednesday was likely due to disappointment with the peace

process in Ukraine after Russian President

Vladimir Putin

refrained from endorsing a full 30-day ceasefire.

In currencies, the dollar index ticked up 0.25%

to 103.57 after dropping to a five-month low of 103.19 on

Tuesday as the euro rallied on the approval of the

German spending bill by parliament's lower house.

The dollar rose slightly against the yen after

the

Bank of Japan

held rates as expected and was last up 0.2% at 149.60.

Attention now turns to

the Fed

, which traders expect to keep rates in the 4.25%-4.50%

range. Investors will focus on new economic projections amid

tumbling stock markets and signs of tightening credit.

Markets are pricing in around 60 basis points of easing

this year from the Fed, with the first cut fully priced in for

July, LSEG data showed.

TURKISH SELL-OFF

The Turkish lira slid in its biggest daily fall since

the peak of the country's most recent

currency crisis

in June 2023 and last traded at around 39 per dollar, down

around 5%.

Investors ditched Turkish assets after authorities

detained Ekrem Imamoglu, the popular mayor of Istanbul, on

Wednesday on charges including corruption and aiding a terrorist

group. The main opposition party called the arrest "a coup

against our next president".

Turkey's main stock index was last around 6%

lower and government bond prices dropped as analysts said the

arrest raises concerns about economic reforms in Turkey.

"Traders had become increasingly complacent, and that

spell has now been broken, with dramatic results as traders

reprice Turkey's political risk premia, triggering this

morning's sharp lira selloff," said Nick Rees, head of macro

research at Monex Europe.

Analysts said the move out of the lira was likely

boosting the U.S. dollar.