LONDON, May 10: European stocks dipped on Wednesday, snapping a four-day winning streak as lacklustre technology stocks weighed and investors nervously awaited the outcome of a Federal Reserve rate-setting meet.

Takeover activity and corporate earnings were in the spotlight. Verbund leapt after OMV agreed to buy Austria’s biggest utility, while Adecco, DSG and Carlsberg rose after buoyant results.

The FTSEurofirst 300 closed down 0.6 per cent at 1,397.5 points, distancing itself from a near five-year high of 1,407.08 on Monday.

Everybody is waiting for the FOMC (Federal Open Market Committee). What will be extremely important is the comments that (Fed Chairman Ben) Bernanke makes, said Philippe Gijsels, Fortis Bank’s senior equity strategist. I’m a little bit afraid that the markets might be a little bit disappointed.

The Federal Reserve is widely expected to raise overnight rates at 1815 GMT by 25 basis points for the 16th straight time, taking the key rate to 5 per cent.

The European benchmark index, which eased after rising four days in a row, is already up 10 per cent this year on forecast-beating company results and a jump in mergers and acquisitions.

Most people are still bullish as company results have been pretty good, but they want a clear idea of where U.S. interest rates are headed, said a trader.

Among technology stocks, Ericsson shed 5 per cent after saying it expected little change in margins in the second quarter. Nokia dropped 1.8 per cent.

Software maker SAP eased 1.2 per cent, and STMicroelectronics dropped 1.8 per cent, following a drop by technology bellwether Cisco after its revenue forecasts disappointed investors.

Elsewhere in the sector, Infineon dropped 3.2 per cent as investors worried about the timing of its plans to list its Qimonda chip unit on the New York Stock Exchange.

Merger activity continued to bubble away, with Verbund shares up 5.4 per cent after OMV agreed to buy the power generator in a deal worth 13.1 billion euros ($16.8 billion). OMV shares rose 3 per cent.

While the market may see the deal as a strategic U-turn from an OMV perspective, we see some rationale that the new merged entity could make a more powerful competitive force in the Central European energy arena, Merrill Lynch analysts said in a note.

A steady stream of earnings results continued, with Swiss staffing firm Adecco up 7.3 per cent in heavy volume after reporting a 59 per cent rise in its first-quarter net profit, topping analysts’ average estimate.

Danish brewer Carlsberg swung to a surprise first-quarter operating profit, lifting its shares 6.9 per cent. Britain’s biggest electrical retailer, DSG jumped 7 per cent after its profit beat most analysts’ forecasts.

Oil stocks slid as US crude traded around $70 a barrel, with BP down 1.2 per cent and Total off 1.4 per cent.—Reuters