Europe: Shares inch lower ahead of ECB meeting, carmakers drag

[BENGALURU] A European stock market rally paused on Thursday, with investors focussing on a European Central Bank meeting where policymakers are expected to provide more aid for the battered euro zone economy.

The pan-European Stoxx 600 index slipped 0.5 per cent by 7.08am GMT, but held near its early March highs, while eurozone stocks were down 0.6 per cent.

Automakers and banks led the declines, falling 2.5 per cent and 1.8 per cent, respectively.

Equity markets have bounced strongly this week, with Wall Street's tech-heavy Nasdaq nearing record levels as signs of recovery from a coronavirus-forced recession, optimism over a Covid-19 vaccine and hopes of more stimulus boosted risk appetite.

Investors expect the ECB to upsize bond purchases by 500 billion euros (S$783.50 billion), but the only question is whether it will act on Thursday or hold out until July as a deal on European Union-wide fiscal support strengthens the case for patience.

Meanwhile, Germany's coalition parties agreed a 130-billion-euros stimulus package to speed up a recovery from the coronavirus on Wednesday, but shares in Daimler, BMW and Volkswagen slid between 2.6 per cent and 4.5 per cent as the packaged favoured electric cars.

French spirits company Remy Cointreau jumped 6.9 per cent after it predicted a strong recovery in the second half, driven by China and the United States.

REUTERS