By Sruthi Shankar and Ambar Warrick

(Reuters) -European stocks ended a shade lower on Tuesday as optimism over strong British earnings was offset by UBS disclosing a hit from dealing with U.S. investment firm Archegos, while travel stocks hit record highs on hopes of a post-COVID rebound.

The pan-European STOXX 600 index slipped 0.1%, with investors holding off big bets ahead of the U.S. Federal Reserve’s policy decision on Wednesday. The bank is widely expected to maintain easy monetary policy.

Oil major BP rose 0.4% after its first-quarter profit soared and it planned share buybacks, while Asia-focused lender HSBC gained 4.2% after it reported an upbeat quarterly profit.

Meanwhile, UBS fell 2.0% to a two-month closing low as it took an unexpected $774 million hit from Archegos, overshadowing a forecast-beating 14% rise in quarterly net profit.

Still, markets were caught in a tight trading range as investors watched for any clues on the timing of the Fed’s eventual policy tightening, which the bank has said will depend on employment and inflation levels.

“Ultimately, the exact timing of tapering will be a judgement call by the Fed,” Unicredit analysts said.

“They will likely want to see a sequence of better data on jobs and economic activity that substantially reduces the ‘gaps’ to pre-crisis levels, reinforced by a sustainable improvement in the health situation.”

Global stocks have hit record highs recently on optimism about a economic recovery as the pace of vaccination picked up across developed economies.

European travel stocks shared this sentiment, surging 3.0% to close at a record high. Bank stocks also ended higher on upbeat earnings, as well as support from increasing euro zone bond yields. [GVD/EUR]

About a quarter of STOXX companies are set to publish earnings this week. Among the 17% that have reported so far, 65% topped profit estimates, according to Refinitiv IBES data.

Sweden’s Evolution Gaming Group jumped 14.5% to the top of the STOXX 600, as it reported a 150% jump in quarterly core earnings as the COVID-19 pandemic boosted demand for online casino games.

Danish freight forwarder DSV Panalpina surged 6.8% after it agreed to buy the logistics division of Kuwait’s Agility Public Warehousing Co in a deal worth $4.1 billion.

French diagnostics group Biomerieux fell 6.9% to the bottom of the STOXX 600 after it halved its sales outlook for the first half of the year as the easing pandemic looked to cut demand.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)