European stocks slip from recent highs, telecom deals in focus
* KPN leads gains after Deutsche Telekom unit sale
* Meggitt tumbles as TransDigm drops bid
* Traders await ECB meeting on Thursday (Updates to market close)
By Sruthi Shankar and Ambar Warrick
Sept 7 (Reuters) - European stocks ended lower on Tuesday as caution kicked in ahead of a European Central Bank meeting later this week, while focus turned to a flurry of telecom deals led by Deutsche Telekom DTEGn.DE .
The pan-European STOXX 600 index .STOXX slipped 0.5% after coming close to a record high in the previous session. Utilities .SX6P , healthcare .SXDP and chemical .SX4P stocks were among the top decliners.
Spurring moves in telecoms, Deutsche Telekom DTEGn.DE struck a share-swap deal with SoftBank Group 9984.T to increase its stake in U.S. unit T-Mobile TMUS.O . The stock fell slightly.
The company and Swedish telecoms operator Tele2 TEL2b.ST also agreed to sell their Dutch unit to private equity groups for an enterprise value of 5.1 billion euros ($6.05 billion).
Dutch peer KPN KPN.AS rose 4.1%, leading gains on the STOXX 600, while UK's BT BT.L fell 0.1% on news Deutsche Telekom is weighing options for its 12% stake in BT.
The wider telecoms index .SXKP rose 0.1%.
Caution prevailed ahead of the ECB meeting on Thursday, with a recent surge in euro zone inflation and improving economic data driving bets of tighter monetary policy.
"It's believed that the ECB is discussing tapering their PEPP purchases. If it is, then investors will look for signs that they are going to compensate by making purchases through other schemes," said Andrea Cicione, head of strategy at TS Lombard.
"The reason they wouldn't want to get ahead of the Fed is because any hawkish remark by Lagarde or the ECB would cause even more strength in the euro, which would be negative for European growth."
The benchmark STOXX 600 has gained almost 19% so far this year, slightly lagging New York's S&P 500, as relatively high rates of vaccination brightened the recovery outlook, with many people returning to offices following sweeping restrictions last year.
Hopes of more economic stimulus for China and Japan, as well as growing views the U.S. Federal Reserve is likely to delay the start of tapering its asset purchases pushed world stocks to record highs earlier.
British engineering firm Meggitt MGGT.L fell 12.1%, and was the worst performer on the STOXX 600 after aerospace parts maker TransDigm TDG.N bowed out of a $8.7 billion takeover battle for the firm.
The world's largest inter-dealer broker TP ICAP Group TCAPI.L slumped 10.7% after reporting a lower half-year profit.
Upmarket fashion retailer Ted Baker TED.L climbed 0.2% as sales surged during the second quarter as customers returned to shops after months of coronavirus restrictions.
Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta, Louise Heavens and Richard Chang
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