Europe: Stocks pare losses after ECB slows stimulus, as expected

[BENGALURU] Euro zone stocks bounced off session lows to end little changed on Thursday after the European Central Bank signalled it will only slightly reduce its emergency bond purchases over the coming quarter, as widely expected.

After falling as much as 0.9 per cent in morning trade, the pan-European Stoxx 600 index ended largely unchanged around 467.57 points. The index had shed 1.5 per cent over the past two days on fears of a more-hawkish-than-expected ECB.

Rate-sensitive banking stocks in the bloc rose 0.2 per cent, while real estate stocks led gains with a 1.0 per cent rise.

The ECB, while taking a token step towards unwinding the emergency aid, gave no signal of its next policy move, including how it might dismantle the 1.85-trillion-euro Pandemic Emergency Purchase Programme (PEPP), which has kept borrowing costs low for governments and businesses.

"Today's meeting confirms our earlier expectations that PEPP will end after March. That said, the ECB clearly remains data-dependent, and has kept all options open for December," Rabobank analysts wrote in a note.

"That desire to remain flexible is also underscored by the avoidance of the word 'tapering', and the message that today did not mark a turning point for PEPP." Analysts now expect the ECB to outline plans for major policy changes by December, and a gradual phasing out of the PEPP by March 2022.

UK's FTSE 100 led losses among regional indexes with a 1.0 per cent drop.

British airline easyJet tumbled 10.2 per cent and was the worst performer on the Stoxx 600 after it rejected a takeover approach from Wizz Air, opting instead to raise US$1.7 billion from shareholders and go it alone in an industry battling to recover from the pandemic.

Rival British Airways-owner IAG fell 1.1 per cent, while Wizz Air dropped 1.2 per cent, weighing on the wider travel & leisure index.

After hitting record highs in mid-August, the Stoxx 600 has traded below those levels amid investor worries over the fast-spreading Delta coronavirus variant, a slowing economic recovery, and the withdrawal of stimulus by major central banks.

With Chinese gaming stocks coming under pressure from fresh regulatory scrutiny, Dutch investor Prosus, which has a stake in Chinese tech giant Tencent, fell 5.2 per cent.

European gaming stocks including France's Ubisoft, Embracer and Rovio fell 1.6 per cent and 3.2 per cent, respectively.

REUTERS