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European markets close lower as sterling falls; Dutch election in focus; RWE up 6.4%

European markets closed lower on Tuesday as investors digested political events across the continent and awaited a probable interest rate hike from the U.S. Federal Reserve.

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The pan-European Stoxx 600 ended more than 0.3 percent lower with most sectors and major bourses trading in negative territory.

Swiss drugmaker Galenica announced it was expecting the flotation of one of its units to be concluded in the second quarter of 2017. The company also announced a 19 percent fall in its 2016 profits and as a result, the stock was near the bottom of the European benchmark, down by over 5.1 percent.

The British retailer Marks and Spencer also moved lower on Tuesday following reports that it is pulling out of the Chinese high street this month. Its shares dropped 2.1 percent.

Energy firm RWE closed at the top of the European benchmark, up by 6.4 percent, after reporting earnings amid talks of a potential merger of one of its divisions. Paris-based energy firm Engie was said to be considering a stake in RWE's subsidiary Innogy, according to a Bloomberg report. However, French outlet BFM TV cited an unnamed source on Tuesday who had declared the gas and power company had no interest in making any such bid. Engie shares closed over 1.3 percent lower.

Shares of the online supermarket Ocado pared gains from earlier in the session to close 0.7 percent lower, on comments from its chief financial officer that he is confident the company will secure international deals.

The British insurer Prudential rose 3 percent after posting an operating profit of £4.3 billion ($5.16 billion), beating expectations, thanks to growth in its Asian business.

Meanwhile, in the U.S., the Dow Jones industrial average and broader S&P 500 both continued to move lower as investors eyed the first day of the Federal Open Market Committee's two-day meeting.

Brexit focus

However, the market's main focus is likely to be Brexit. Prime Minister Theresa May won the right to trigger negotiations with the EU on Monday evening. However, with Scotland asking for a new independence referendum before the U.K. leaves the EU in 2019, several media reports suggest the prime minister will wait until the end of March to formally begin negotiations. Sterling reached an eight-week low on Tuesday morning.

Elsewhere, in the Netherlands, Prime Minister Mark Rutte told CNBC on Tuesday that Turkey's President Tayyip Erdogan was "totally off the mark" when he recently compared the Dutch to Nazis and had behaved in an "increasingly hysterical" manner.

The Dutch prime minister urged voters they shouldn't succumb to the "domino effect" of populism after the Brexit vote and the election of Donald Trump. Polls to elect a new government open Wednesday.

In terms of data, the latest euro zone industrial production figures showed a weaker than expected output. Production rose 0.9 percent in January from its previous month, but economists were expecting a 1.4 percent increase.

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