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* Eurozone banks slide on new dividend recommendation
* BAT slumps after cutting profit, revenue forecast
* World Bank sees global output shrinking by 5.2% in 2020
(Updates to market close)
By Sruthi Shankar
June 9 (Reuters) - Banks and oil companies led European
stocks lower on Tuesday as investors turned wary ahead of the
U.S. Federal Reserve's policy meeting.
The pan-European STOXX 600 index fell 1.2%, while
the main markets in Frankfurt, London and Paris
were down between 1.6% and 2.1%.
After a stunning 46% recovery from all-time lows, eurozone
banks fell 3.8% after an EU financial stability watchdog
said banks should not be allowed to pay dividends at least until
the end of this year.
Oil majors Royal Dutch Shell, BP and Total
fell between 3% and 4.5% as oil prices fell due to a
stronger dollar and oversupply concerns.
Other sectors considered most geared to economic growth
such as automakers, travel and leisure and
insurers, which led a market recovery in the recent
weeks, fell between 2% and 3.4%.
Investors were also awaiting the conclusion of the Fed's
monetary policy meeting on Wednesday for its views on recent
signs of economic recovery.
"Some of the moves were pretty crazy yesterday and we are
keeping back a little. Maybe a bit concerned pre-Fed," said
Keith Temperton, a trader at Tavira Securities.
"My feeling is the Fed is not going to say or do anything.
They're probably going to reserve the next round of ammunition
for potential damage from a second wave or if more lockdown is
required."
The World Bank said on Monday the coronavirus crisis will
cause global economic output to contract by 5.2% in 2020,
warning that its forecasts would be revised downward if
uncertainty persists.
However, a surprise recovery in U.S. jobs data and
unprecedented stimulus from central banks have helped push the
European benchmark rise just 15% below its record high, while
Wall Street's tech-heavy Nasdaq confirmed a return to
bull market on Monday.
"I personally don't expect a V-shaped recovery in economic
growth. It will take some time to find economic normalization,"
said Matthias Scheiber, global head of portfolio management,
multi-asset solutions for Wells Fargo Asset Management.
Healthcare and technology stocks, which have
taken a hit in the recent days, rose 0.7% and 0.1%.
British American Tobacco (BAT) slid 3.1% after it
cut annual targets, citing a demand hit from stricter lockdown
measures in key emerging markets.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Arun
Koyyur and Philippa Fletcher)
