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May 21 Reuters European stocks inched lower on Tuesday, following losses in Asian equities, as calls from U.S. Federal Reserve officials for policy caution tempered investor enthusiasm about potential interest rate cuts this year.

The panEuropean STOXX 600 index slipped 0.3, on track for its biggest oneday drop in three weeks, with banks and utility leading sectoral declines.

Lenderheavy Italian share index lagged regional peers, falling about 1 to a more than oneweek low.

Investors will focus on minutes from the Fed39;s last policy meeting and chip giant Nvidia39;s earnings on Wednesday to see if the recent momentum, that pushed U.S. and European equities to record highs, continues.

Denting optimism about potential U.S. rate cuts this year, Fed officials including Vice Chair Philip Jefferson were not ready to say on Monday inflation is heading to the central bank39;s 2 target, with several calling for continued policy caution.

Traders have priced in U.S. rate cuts of 42 basis points by the end of 2024 but anticipate cuts worth 65 bps from the European Central Bank, as per LSEG rate probabilities app, with the first cut from the ECB seen in June.

Several ECB speakers have recently indicated that a rate cut in June is highly likely, while ECB action thereafter will depend on future data. Eurozone PMIs and ECB negotiated wages, to be published on…