RTTNews - The European markets fell for the second day on Tuesday, as banking stocks weighed, led by Lloyds, which declined after a newspaper report said the British mortgage lender may face government resistance for its tentative multi-billion pound share issue.

The investors were also anxious, as the U.S. Federal Reserve started its two-day policy meeting that could offer more clues as to how the world's largest economy is faring.

The Fed is widely expected to hold interest rates steady at near zero when it ends its meeting Wednesday. However, investors will be closely watching its accompanying statement for a note of cautious optimism about the economy.

The U.S. Commerce Department said in a report that wholesale inventories fell 1.7% in June following a revised 1.2% decrease in May. Economists had expected inventories to fall 0.9% compared to the 0.8% drop originally reported for the previous month.

Meanwhile, a report showed that China's exports fell for the ninth consecutive month. Data released by the National Bureau of Statistics said industrial output climbed 10.8% year-on-year in July, faster than the 10.7% growth in June, but lower than economists' expectations for a 11.7% rise.

Crude for September delivery fell $1.37 to $69.23 a barrel on the New York Mercantile exchange, by the time the European markets closed, as a U.S. Labor Department report suggested consumer spending may be depressed for some time.

The FTSEurfirst 300 index of pan-European blue chips closed 1.32% lower at 932.22 points, while the narrower DJ Stoxx 50 index fell 1.18% to 2,315.69 points.

Around Europe, the U.K.'s FTSE 100 index fell 1.08% to 4,671.34, while France's CAC 40 index slipped 1.38% to 3,456.18 and Germany's DAX index dropped 2.445 to 5,285.81.

Lloyds dropped 7.1% after the Financial Times reported that the lender may face resistance to its tentative plan to raise about £15 billion pounds in a rights offer to reduce reliance on the government.

Danske Bank, Denmark's Biggest lender, fell 2.1% after the company reported an unexpected net loss.

French bank Natixis tubled 17.5% after its parent, BCPE bank, told French market regulator AMF that it did not plan to delist the shares of Natixis.

Adecco, the world's largest temporary staffing company, slipped 5.6% after the company reported a ?147 million second quarter net loss.

Mining stocks edged lower after copper prices declined. BHP Billiton, the world's biggest miner, fell 1.5%, while Anglo American, the second biggest, slipped 2.3% and Rio Tinto, the third biggest, dipped 1.6%. Copper miner Antofagasta lost 2%.

German chemicals and drug maker Bayer slid 4% after the company denied market talk that it was looking to raise more capital.

On the other hand, International Power rose 7.3% after the company's first-half operating profit beat analysts' estimate.

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