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Fed nerves hit European shares

London - European equity indexes fell on Tuesday as nerves about a tightening in US monetary policy sapped investor enthusiasm - even for new mergers & acquisitions activity.

France's Orange fell 1.2% after unveiling a deal to buy Spanish fixed line telecommunications operator Jazztel, whose shares surged 6%, adding to a 12% rise on Monday.

Shares in Danish telecoms group TDC were down 1.2% after it said it would buy Norway's second-largest cable operator, Get AS, in a bid to counter falling revenues in its home market by expanding in other markets.

At 09:45, the FTSEurofirst 300 index of top European shares was down 0.5% at 1 375.46 points, falling further away from this month's six-and-a-half year high.

Investors were reluctant to dip back into the market ahead of the US Federal Reserve's two-day policy meeting, due to start today, and a referendum on independence for Scotland from the United Kingdom on Thursday.

Justin Haque, a broker at Hobart Capital Markets, said the new M&A bout was a sign management teams were rushing to finalise deals in expectation of a rise in US interest rates, which would increase borrowing costs and make financing acquisitions more expensive.

"Everybody is buying just before rates go up," said Haque. "The only clever people here are structural sellers."

British online fashion retailer ASOS tumbled 11.8% after downgrading its 2014 to 2015 profit guidance. Sweden's Kinnevik, the largest shareholder in ASOS's competitor Zalando, fell 1.1%.

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