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STOXX 600 flat

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Sweden cuts interest rates to 3.25% from 3.5%

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SAP down on report of alleged price-fixing

(Updated at 0805 GMT)

By Pranav Kashyap

Sept 25 (Reuters) - European shares pared some losses on

Wednesday, supported by a rise in basic resources, even as a

rally stimulated by China's stimulus package showed signs of

slowing down.

The pan-European STOXX 600 index was trading flat

at 519.33, after losing 0.3% at the opening bell.

In Asia, Chinese stocks extended their stimulus-fuelled

rally to a second day, while other markets struggled for

direction.

Sweden's benchmark OMXS 30 moved higher, ticking

up 0.4% after its central bank cut its key interest rate to

3.25% from 3.50%, as expected and signals more easing ahead.

SAP declined 3.6% after a report said the German

software developer was under investigation in the United States

for alleged price-fixing. The stock weighed the most on the

benchmark and dragged the technology sub-index down by

0.7%.

The oil and gas sector led sectoral declines, losing

0.7% on worries that China's stimulus plans did not have enough

to boost demand.

Basis Resources helped to mitigate losses, gaining

0.2% as copper prices continued their rally, reaching over

two-month highs in the afterglow of China's stimulus plans.

Gains in luxury stocks such as LVMH and Hermes

also provided support.

France's CAC 40 ticked 0.4% lower after gaining more

than 1% in the previous session. Data showed consumer confidence

in the country increased in September. The country's employment

data is due at 1000 GMT.

On Tuesday, China's central bank rolled out its most

significant stimulus package since the pandemic, aiming to lift

the economy out of its deflationary slump. This move sparked a

rally in European equities, with French luxury stocks

experiencing the greatest surge.

However, investors are shifting their attention to the U.S.

economy's health. Overnight, data revealed an unexpected drop in

U.S. consumer confidence for this month, marking the steepest

decline since August 2021. As a result, traders are now

factoring in a 60.4% chance of another substantial rate cut by

the U.S. Federal Reserve.

"This combination of ... increased stimulus out of China

and a dovish Fed is a good combination for risk assets," Elias

Haddad, senior markets strategist at Brown Brothers Harriman

said.

However, "the only risk is if the downturn in Eurozone

economic activity is as severe as what the leading indicators

are pointing, that's a headwind for European equities," he said.

Among other notable stock moves, Valmet Oyj ( VOYJF )

surged 10.7% after the Finnish engineering company secured an

order worth more than 1 billion euros in Brazil.