Europe: Shares fall from highs, turn lower after ECB

[LONDON] European shares turned lower late on Wednesday, mirroring a selloff in German bonds, after the European Central Bank raised its inflation forecasts and said it would look through any debt market volatility.

Main indexes gave away early gains while the euro rose broadly and German Bund yields soared after ECB President Mario Draghi said the bank would maintain a steady policy and look through bond market volatility.

The pan-European FTSEurofirst 300 index was down 0.1 per cent at 1,570.76 points, even while most national indexes remained in positive territory, with the index price skewed by a surge in the euro following Draghi's comments.

However, the likes of Germany's DAX and France's CAC did fall back from their intraday highs, with investors saying that Draghi might have been more dovish. "What people are slightly disappointed about is that it doesn't sound like Draghi wants to do more in the short term... (and) any rise in the euro will put pressure on equities," Veronika Pechlaner, European fund manager at Ashburton, said. "The only wording he used was that we should get used to periods of volatility, and in the market's terms, that's not good enough." The overall market was supported by market supermarket groups Ahold and Delhaize, after media reports suggesting merger talks between the two could come to a successful conclusion as early as June.

Shares in Ahold and Delhaize rose 5.9 per cent and 7.4 per cent respectively. The two companies are in talks to create a top 20 global retailer with a major presence in the United States. A deal would produce a combined retailer worth around 23 billion euros (S$34.9 billion).

Germany's DAX advanced 0.8 per cent, helped by a 1.2 per cent rise in Adidas after Fifa President Sepp Blatter said he would step down as soccer's global governing body comes under scrutiny.

Adidas is a Fifa sponsor and experts said Blatter's resignation would be a major relief.

Spanish travel booking technology company Amadeus fell 9.7 per cent after German airline Lufthansa said it would levy a 16-euro surcharge on tickets not booked on their website. Analysts said there were concerns that others would want to do the same.

Greece's Athex index was up 4.1 per cent before talks between Greek Prime Minister Alexis Tsipras and European Commission President Jean-Claude Juncker later on Wednesday, with traders saying there was a chance some accord could be found to stave off the latest threat of default.

"Overall there is still some optimism that a deal will be struck in the end but for now uncertainty is likely to continue," Markus Huber, senior analyst at Peregrine & Black, said.

REUTERS