European equities retreated Thursday after the ECB and Bank of England kept interest rates on hold, and as traders also took positions ahead of major US data, dealers said.
In afternoon trade, London’s FTSE 100 index of top companies shed 0.44 percent to 6,391.23 points, Frankfurt’s DAX 30 fell 0.29 percent to 8,172.57 points, and in Paris the CAC 40 was down 0.35 percent at 3,839.06 points.
The European Central Bank on Thursday kept its key refinancing rate unchanged at an all-time low of 0.50 percent in a widely anticipated move, after cutting rates by a quarter of a percentage point last month.
The ECB also fine-tuned its growth forecasts for the 17-country eurozone, projecting the eurozone economy to shrink by 0.6 percent this year and then grow by 1.1 percent next year.
“Stocks in Europe have slipped Thursday afternoon, losing composure after ECB chief Mario Draghi says at the monthly press conference that negative deposit rate being on the shelf and the central bank is technically ready for them,” ETX Capital trader Ishaq Siddiqi said.
He added the “comments on the whole are being regarded by markets as ‘hawkish’ with Draghi not hinting on the use of any measures any time soon.”
While little prospect of further support for the economy from the ECB hurt stock prices, it boosted the euro, which climbed to $1.3152 from $1.3089 late in New York on Wednesday.
The dollar increased to 99.30 yen from 99.16 yen on Wednesday.
The Bank of England also as expected kept its main interest rate at 0.50 percent, where it has stood for more than four years, and chose not to inject any more monetary stimulus to support the fragile recovery of the British economy.
US stocks opened slightly higher, but a modest fall in jobless claims — by 11,000 to 346,000 in the week ending June 1 — failed to dispel worries that the May job creation and unemployment numbers to be released Friday will prove a disappointment.
The vital US non-farm payrolls (NFP) data lends hints on the health of the world’s biggest economy.
Shortly after opening, the Dow Jones Industrial Average was up 0.15 percent at 14,982.56 points, the broad-based S&P 500 added 0.21 percent at 1,612.21, while the tech-rich Nasdaq Composite increased 0.38 percent to 3,414.38.
“Traders may be tempted to sit on their hands in the short term with the NFP due for release tomorrow,” said Mike McCudden, head of derivatives at stockbroker Interactive Investor.
In earlier trade, Asian markets sank Thursday following a sell-off on Wall Street, where dealers were spooked as weaker-than-expected data on private jobs creation underscored weakness in the US economy.
Tokyo stocks fell 0.85 percent, extending an almost four percent decline on Wednesday due to disappointment at Prime Minister Shinzo Abe’s latest plan to boost the economy.
European shares drop after interest rates kept on hold
