European shares steady after trade slide; Fed in focus

By Susan Mathew and Medha Singh

(Reuters) - European shares steadied on Wednesday, as strong results from lenders BNP Paribas and Credit Suisse countered a poor report from British bank Lloyds in a market marking time ahead of a keenly-awaited U.S. Federal Reserve decision on interest rates.

European markets racked up their worst day in nearly three months on Tuesday, as stocks globally took a beating from a toughening of President Donald Trump's trade rhetoric against China and Brexit worries hit Irish and UK companies.

After inching lower in early trade, the pan-European STOXX 600 <.STOXX> was flat on the day by 0813 GMT.

In a month dominated by corporate earnings and expectations of monetary easing by both the Federal Reserve and the European Central Bank to help the economy, the STOXX is now only marginally higher for the month.

"It's just position tweaking more than anything else. Definitely a feeling of some risk-on rotation. You've got a combination of both, month end and the Fed this evening," Mark Taylor, sales trader at Mirabaud Securities.

"Given how much hype there has been around this event (Fed meeting), I would be surprised if people weren't already prepositioned and literally just having to react to the earnings headlines. You'll see volumes drift throughout the day."

France's largest bank by assets, BNP Paribas rose 3.3% after a strong performance by its corporate and investment banking division buoyed quarterly profits, while Credit Suisse (OTC: CSGN) reported its highest quarterly earnings in four years, sending shares 4% higher.

Europe's banking index <.SX7P> rose 0.4%

Lloyds Banking Group , Britain's biggest mortgage lender, dropped 3.9% after posting weaker-than-expected pretax profits, taking London's FTSE 100 <.FTSE> down 0.3%, in an otherwise quite market.

The Fed's decision is expected after European market hours at 1800 GMT, with Chair Jerome Powell scheduled to hold a press conference soon after.

A quarter-point cut by the U.S. central bank has been fully priced in by money markets, but investors will be looking at the comments with the decision for signs of how far it could go with further easing this year.

The latest data from Germany offered a rare beam of hope on consumer sentiment in Europe's largest economy. Frankfurt's main DAX index <.GDAXI> rose 0.2% after data showed German retail sales rose more than expected in June.

Playing into that, sportswear group Puma gained 7% as it raised its outlook for sales growth and operating profit for 2019. Rival Adidas advanced 1.2%.

In Paris, the main stocks index <.FCHI> was flat, caught between a 4% drop in beauty products maker L'Oreal after disappointing quarterly sales growth, and rallies in BNP Paribas, construction group Vinci and eyewear maker Essilorluxottica .

Vinci rose 3.2% after good results, while EssilorLuxottica jumped 3.2% after saying it would buy Dutch optical retailer GrandVision in a cash transaction that could amount to a total of 7.2 billion euros ($8 billion).

(Reporting by Susan Mathew in Bengaluru)

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