- Healthcare index hits more than two-month low
- Swedish central bank sees rate cuts at end but uncertainty high
- STOXX 600 down 0.6%
March 26 (Reuters) - European shares fell on Wednesday, led by declines in healthcare stocks, while caution prevailed ahead of a fresh round of U.S. tariffs set to take effect next week.
The pan-European STOXX 600 index dropped 0.6%, with losses in heavyweight Novo Nordisk, Novartis AG and Roche dragging the healthcare index to two-month lows.
Energy stocks were among a few bright spots, helped by oil prices hitting a three-week high.
Still, the STOXX 600 index is on track for its best quarter in two years, on the back of hopes that a historic German fiscal package would spur growth in the region's largest economy.
The region has also attracted investors looking for value beyond U.S. equities as the Trump Administration's trade policy fuelled U.S. slowdown worries.
"Europe is probably still quite under-owned and it's still good value in totality," said Phil Webster, director of portfolio management at Columbia Threadneedle Investments, adding that some of the biggest sectors such as financials, healthcare and industrials are "fundamentally cheap".
"Markets generally need some sense of stability post-Trump... some understanding of where tariffs might land."
Earlier this week, global risk sentiment improved as U.S. President Donald Trump signalled a more measured approach to trade policy ahead of the April 2 deadline, when sweeping reciprocal tariff plans are set to take effect.
Across the pond, the European Central Bank must be pragmatic and data-driven in setting its interest rates, governing council member Fabio Panetta said in a letter to the Financial Times.
Meanwhile, Sweden's central bank is set to hold the interest rate steady for the foreseeable future, minutes of the latest policy meeting showed, but rate-setters are ready to act if inflation deviates too much from the target.
Stockholm's benchmark stock index slipped 0.8%.
"I think the bigger issue is if tariffs are going to stoke U.S. inflation," Webster said.
The centrepiece of this week will be data on the U.S. Federal Reserve's preferred inflation measure due on Friday.
In the UK, British inflation slowed more than expected in February, bringing some relief to consumers ahead of finance minister Rachel Reeves' budget update speech later in the day.
Among other stocks, CD Projekt slumped by 10% after the Polish video game maker said the premiere of "Witcher IV" is scheduled for after 2026.
Shares of MFE-MediaForEurope rose 1% after Reuters reported, citing three sources with knowledge of the matter, the TV group controlled by Italy's Berlusconi family has called for a board meeting to review a possible bid for German peer ProSiebenSat.1. ProSieben shares firmed 3.9%.
Reporting by Medha Singh in Bengaluru; Editing by Rashmi Aich and Krishna Chandra Eluri
Source: Reuters