Europe close: ECB chief economist cautious on Brexit too, Telefonica drags on Ibex 35

Shares on the Continent are slightly lower at the closing bell, with 'dovish' remarks from the European Central Bank's chief economist - who cited the uncertainty around the Brexit negotiations - and its vice-president amply making up for a dearth of economic data.

The benchmark Stoxx 600 ended 0.52% lower at 394.39, with 'market chatter' focused on whether the index will breach its early 2015 and multi-decade highs of 416, alongside a 0.36% drop that took Germany's Dax to 12,711.06.

Spain's Ibex 35 on the other hand was pumeled, falling 1.57%, as index heavyweight Telefonica sank 4.31% and investors booked profits on Banco Popular on the heels of a recent strong rebound in its shares.

"Stocks have struggled for direction today with a slightly weaker bias across the board as a lack of positive drivers has weighed on sentiment. It would appear that while political risk has subsidised investors remain far from convinced that further upside can be sustained without further evidence of a positive pickup in the economic numbers," said CMC Markets UK's chief analyst, Michael Hewson.

Euro/dollar was winding sideways at 1.0870, helped by arbitrage buying as the single currency gained against Sterling after Thursday's MPC meeting.

Nevertheless, and on a somewhat similar note to the Bank of England, on Thursday the ECB's chief economist Peter Praet told Trends/Tendances political risks were decreasing but policy uncertainties around Brexit, together with a separate wide array of risks.

"Policy uncertainties still persist – Brexit, for example. We've seen how negotiations can swing very fast from one side to the other. And as far as the economy is concerned, there's still a wide array of risks. They're moving towards a more balanced configuration, but are still tilted to the downside," Praet said in his interview.

ECB vice-president Vitor Constancio was of a similar mindset, albeit without referencing Brexit.

On the sidelines of a conference, he reportedly said maintaining loose policy for longer was less risky than withdrawing it prematurely.

Acting as a backdrop, shares on Wall Street were lower following hawkish remarks from Boston Fed president Eric Rosengren and after poor results from Macy's and Snap.

Meanwhile, oil prices were up, with Brent crude futures gaining 1.0% to $50.73 per barrel on the ICE.

Ibex 35 hit by share price falls in Telefonica, Dia ...

Spain's Ibex was walloped by a slump in Telefonica shares, which skidded 4% lower after analysts expressed disappointment with its first quarter results.

The incumbent telecoms operator in that Mediterranean country said first quarter profits shot higher by 42.2% to €779.0m, thanks in part to a boost from lower costs and taxes.

But that was still shy of the FactSect analyst consensus for €794.0m. Sales also undershot forecasts.

Spanish supermarket group DIA gave back 4.31% after profits slid 6.4% over the three-month period to March with debt jumping 20%.

Elsewhere, first quarter net profits at Unicredit beat analysts' forecasts, while Commerzbank is planning to slash the headcount at its corporate banking division by a third by 2020 as part of previously announced reductions, according to Handelsblatt reports.

Adidas announced it was to sell its TaylorMade unit to buyout group KPS Capital Partners for $425.0m, but its stock dropped 1.72%.

Shares in Deutsche Post fell even after the German postal and logistics firm confirmed its 2017 profit target.