European Stocks Sag With ECB’s Final Policy Meeting Of The Year On Deck

Steinhoff to restate results; EU leaders gather in Brussels

European stocks slipped Thursday, as investors prepared to receive policy decisions from the European Central Bank and the Bank of England and to hear what the banks may signal about interest rates moving forward.

How markets are moving: The Stoxx Europe 600 index fell 0.3% to 389.61, led by losses in the financial and tech sectors. But the telecom and utility sectors were the top sectors moving upward. On Wednesday, the benchmark slipped 0.2% , pulling back from its highest close since Nov. 8.

Among national indexes, Germany’s DAX 30 index fell 0.2% to 13,099.55, and France’s CAC 40 dropped 0.2% to 5,387.06.

Spain’s IBEX 35 turned up 0.2% to 10,276.50. In London, the FTSE 100 gave up 0.2% at 7,480.10 .

The euro bought $1.1832, extending gains after German manufacturing PMI figures outstripped expectations. The shared currency late Wednesday bought $1.1827 Wednesday in New York.

In the bond market, the yield on Germany’s 10-year government bond was up less than 1 basis point at 0.317%. Yields rise when prices fall.

What’s moving markets: The European Central Bank will release its last policy decision of the year, at 12:45 p.m. London time, or 7:45 a.m. Eastern Time. ECB President Mario Draghi will hold a press conference at 1:30 p.m. London time, or 8:30 a.m. Eastern.

Traders will look for more signals on interest rates, staff projections for economic growth and inflation and whether the bank’s stimulus measures will be further tapered after September 2018. The central bank in October  said it would halve its aggressive bond-buying program to EUR30 billion from EUR60 billion starting next month.

The Bank of England will release its monetary policy decision at noon London time, or 7 a.m. Eastern Time. But after raising rates for the first time in a decade in November, the BOE is widely expected to stand pat Thursday.

The Swiss National Bank on Thursday held its deposit rate at minus 0.75%, meeting expectations.

Brexit in Brussels: Meanwhile, Brexit was a major focus after U.K. Prime Minister Theresa May’s government late Wednesday was defeated in a key parliamentary vote on legislation for the U.K. divorce from the EU.

The setback for the government comes just as EU leaders — including May — prepare to meet in Brussels on Thursday and Friday for a summit where Brexit is high on the agenda. The group is expected to give the green light for divorce talks to move onto the second phase .

The U.K.’s lower house on Wednesday voted to amend the Brexit bill to give members of parliament the power to reject the final divorce deal struck with Brussels. The government had warned that the measure could jeopardize a smooth exit from the EU in March 2019.

The vote — which was an amendment to May’s flagship Brexit bill — came after a rebellion of 11 members of her own Conservative Party, and is seen as a potential route to a softer Brexit.

The pound slipped after the vote on Wednesday, but bounced back early on Thursday.

Stock movers: Steinhoff International Holdings NV slid 13% after the owner of Poundland and Mattress Firm said it will restate its 2016 financial results as part of its scrutiny into its European segment’s 2017 balance sheet assets.

Capita PLC (>> Capita) tumbled 11% as the London-based business and outsourcing services company said its bid pipeline is currently valued at GBP2.5 billion, but that the bids are unlikely to add to profit in 2018 if successful.

Denmark’s Vestas Wind Systems AS (>> Vestas Wind Systems) rose 4.5% and Spain’s Siemens Gamesa Renewable Energy SA (>> Siemens Gamesa Renewable Energy) gained 1.5% following reports that some Republican members of the U.S. Senate are reconsidering potential cuts of tax credits for renewable energy.

Off the Stoxx 600, Lonmin PLC (>> Lonmin Plc) jumped 15% after the platinum producer agreed to be purchased by South Africa’s Sibanye-Stillwater (SGL.JO).

Source: MarketWatch

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