Europe close: Markets turn lower as ECB signals fresh stimulus

European shares slipped below the waterline at the end of a sweltering Thursday, as the market digested an avalanche of earnings reports and a fresh European Central Bank rate decision.

The pan-Europe Stoxx 600 was down 0.56% at 389.52, while Frankfurt’s DAX lost 1.28% to 12,362.10 and the CAC 40 in Paris slipped 0.5% to 5,578.05.

In Madrid, the IBEX 35 was off 0.43% at 9,289.90 and Italy’s FTSE MIB lost 0.8% at 21,903.29, while back in London, the FTSE 100 was down 0.17% at 7,489.05.

Investors watched the European Central Bank leave interest rates unchanged during the afternoon, with it signalling that a rate cut and more monetary easing were still on the cards, however.

The ECB left its main refinancing and deposit rates unchanged at 0.00% and -0.4%, respectively, as expected, while the marginal lending facility was also held steady, at 0.25%.

In its policy statement, the central bank said rates would be left at "present or lower levels" at least through the first half of 2020.

The ECB had previously said it would leave rates "at present levels" during that time period.

“They should call him Il Postino, because Mario Draghi always delivers,” said Neil Wilson, chief market analyst at Markets.com.

“Markets have lusted for more easing and he’s come good.”

Wilson said that, having indicated back in 2012 he would do “whatever it takes”, Draghi had delivered “one final gift” to the ECB with a new policy direction that his successor would carry forward.

“It’s not quite as dovish as we thought it might be in that there was no policy change today, but it sends a very clear signal.”

In corporate news, shares in aerospace and defence supplier Cobham rocketed 34.77% after agreeing to be bought by US private equity firm Advent International for £4bn.

Telecom network equipment maker Nokia was up 7.31% in Helsinki, after reporting an unexpected rise in second-quarter profit.

AstraZeneca surged 7.72% as the pharmaceuticals giant bumped up its product sales forecast for the year after better-than-expected second-quarter numbers.

Howden Joinery stock was also in favour, rising 8.97% on the back of a 13.5% rise in interim profits to £68.8m, although it added that it had it had stockpiled £12m in additional inventory to prepare for a no-deal Brexit.

Shares in Anheuser-Busch InBev rose 4.25% after the world’s biggest brewer beat quarterly earnings expectations as beer sales grew at their fastest in five years.

Sage Group slumped 10.36% after saying it expected organic operating profit margin for the year to be at the lower end of the guided range of 23% to 25%.

Unilever was 2.04% lower in London after the consumer goods giant reported flat interim pre-tax profits as underlying sales grew 3.3%.