European stocks halt advance after two-day rally

London - European stocks edged lower as investors weighed back-to-back gains that pushed equities to their highest level in almost a month.

Daily Mail and General Trust tumbled 7.1% after its first-half profit fell, hurt by a weak print-advertising market. Imagination Technologies Group slipped 3.5% after forecasting a wider-than-expected annual loss stemming from one-time costs.

The Stoxx Europe 600 Index lost 0.2% at 09:12. The benchmark advanced 3.5% in the past two sessions, buoyed by optimism that the US economy can withstand a potential rate increase in June.

European shares yesterday closed just 0.6% below a three-month high reached on April 20. Before this week, a rally that pushed up the Stoxx 600 as much as 16% from a February low had stalled amid concern about slowing global growth, Federal Reserve policy tightening and mixed earnings reports.

Traders are pricing in a 34% chance of higher US borrowing costs in June after Fed officials indicated willingness to act if the economy shows sustained improvement. That’s up from 4% last Monday. July is now the first month with more than even odds for a rate rise. Fed chair Janet Yellen is scheduled to speak on Friday after European markets close.