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Europe: Shares drop as ECB's Draghi cools stimulus talk

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[LONDON] European stock markets fell on Thursday, turning lower after the European Central Bank stuck to its timetable for its stimulus programme and President Mario Draghi said an extension had not been discussed.

The ECB held interest rates steady, as expected, and investors were looking to Mr Draghi's press conference for dovish signs that the central bank's programme of quantitative easing could be allowed to run longer than scheduled.

However, the Stoxx 600 hit session lows shortly after Mr Draghi said such an extension of the programme had not been discussed, while the euro rose.

"It seems the recent deterioration in survey and inflation data is still not enough to push the ECB to ease further. While today's inaction on policy is not too surprising, given their traditionally deliberate nature, we were expecting some language that would help prepare the market for easing later this year," said Timothy Graf, head of macro strategy at State Street Global Markets Emea.

The Stoxx 600 ended down 0.3 per cent, dropping from near eight-month highs but ending up from the day's lows.

The index is down nearly 5 per cent in 2016, although it has rallied over the last two months from lows reached in June after Britain's shock 'Brexit' vote to quit the European Union.

Pearson was the top faller on Thursday, tumbling 7.7 per cent on read-across from disappointing results from US peer John Wiley.

Chip makers also came under pressure, with Austria Microsystems, ASML and Dialog Semiconductor down 3.6-4.9 per cent, after Apple, a major user of chips, released a new iPhone which analysts said was underwhelming.

Among risers, British software company Micro Focus surged 14.7 per cent, the best-performing stock on the Stoxx 600 index, after sealing an US$8.8 billion deal for Hewlett Packard Enterprise to merge its non-core software assets with Micro Focus's business.

However, Rocket Internet fell 4.4 per cent after the German e-commerce investment company cut the valuation of its Home24 online furniture business.