Europe close: Shares end on mixed note as ECB meeting looms nearer
European stocks ended on a mixed note following weaker-than-expected German manufacturing data, with traders starting to look out to Thursday's European Central Bank policy meeting.
By the closing bell the benchmark Stoxx Europe 600 index was down 0.27% to 372.27, Germany’s DAX was higher by 0.06% to 11,966.14 and France’s CAC 40 fell 0.35% to 4,955.00.
Meanwhile, Brent crude was up 0.07% to $56.05 per barrel and West Texas Intermediate was 0.2% firmer at $53.30.
In currency markets, the euro was flat against the dollar at 1.0585 and flat versus the pound at 0.8671.
German factory orders dropped 7.4% month-on-month in January, the biggest fall since 2009, after a 5.2% rise the previous month. This was more than the 2.5% fall predicted by economists. Domestic orders fell 10.5% and foreign orders were down 4.9%.
Regarding the ECB's policy meeting, Andrew Bosomworth, head of PIMCO portfolio management in Germany, made the case for the central bank to keep winding down its policy support.
Bosomworth said: "There is a strong case for the ECB to continue tapering its QE programme, to alter its forward guidance and to begin normalising policy rates. While these changes will tend to tighten financial conditions, this risk is outweighed by the growing risks to the region’s financial stability.
"And the risk of tighter financial conditions is at least partially offset by a stronger U.S. dollar, narrower credit spreads and rising real estate prices. Continuing to taper QE would also send a signal to fiscal agents that they too can contribute to boosting growth."
Investors were also concerned with upcoming elections in the Netherlands on 15 March, in France in April and May, and in Germany in September.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: "In France, the election shenanigans dent the appetite in the financial markets. Alain Juppé said he would not run for the election, as a scandal hit hard Francois Fillon’s campaign. Left with Fillon only, the French right camp could lose more blood. The question is who between Emmanuel Macron and Marine Le Pen would be more susceptible to catch undecided UMP voters?
In corporate news, Casino Guichard dropped 5.59% despite posting 2016 net profits of €2.67m largely due to the sale of its Asia operations.
Temporary power provider Aggreko slumped 12.95% after reporting a 3% drop in full-year underlying earnings amid a gloomy outlook for 2017.
BHP Billiton was up 0.41% after talk of Chile’s presidential hopeful urging striking miners to refuse a poor contract offer, while other miners were in the spotlight as base metals diverge on digestion of slower China growth outlook.
Newly merged bookmaker Paddy Power Betfair was down 5.86% after saying its new financial year has started in line with expectations, as it reported a 35% rise in underlying earnings before interest, tax, depreciation and amortisation to £400m.