Europe close: Stocks move lower as investors ponder next moves from the Fed and BoJ

Stocks moved lower going into the weekend, weighed down by slightly weaker than expected readings on the euro area economy and ahead of next week's US Federal Reserve and Bank of Japan policy meetings.

The benchmark DJ Stoxx 600 was 0.32% or 1.13 points lower to 348.46, the Dax was down by 0.60% or 62.24 points at 10.373.49 and the Cac-40 registered a decline of 0.29% or 13.17 points to 4,569.66.

Athens's general index was one exception, rising 1.20% to 605.92, on hopes that a deal with Brussels to reduce the country's debt load can be reached next week.

Automobile stocks weighed on the main benchmarks throughout the session, with the Stoxx 600 Automobiles&Parts sub-index retreating by 2.36% to 500.42.

Basic resource companies were also a drag with a gauge for the sector down by 1.05% to 302.96, despite commodity prices putting in another strong performance.

Three-month copper futures rose 1.6% to $5,047.50 per metric tonne on the LME.

“Earnings season continues to underwhelm on both continents and the economic data doesn’t give much to be happier about.

"It’s worth noting that we are still broadly higher on the week but still, there is a feeling that we needed a decent earnings season to justify equities at these elevated levels, particularly in the US where the Dow and S&P 500 are within touching distance of all-time highs.” Craig Erlam, senior market analyst at Oanda, said in a research note sent to clients.

Looking out to the Fed meeting next week, analysts at Deutsche Bank told clients that “market expectations for the Fed already appear close to maximum ‘dovishness’, with improving US macro momentum, lower financial stress and rising inflation all making it more likely that the Fed will attempt another rate hike over the coming months.”

Adding to the downbeat mood, Markit's ‘flash’ composite purchasing managers' index for Germany dipped from a reading of 54.0 in March to 53.8 in April, a nine-month low, as a gauge of service sector activity weighed.

On the other hand, the 'flash' manufacturing PMI for the euro area's largest economy - arguably the most important of the two - improved from a reading of 50.0 to 51.9 (consensus: 50.7).

Despite that, and commenting on the equivalent PMI data covering the whole of the euro area, Chris Williamson, chief economist at Markit said: “A failure of business expectations to revive following the ECB’s announcement of more aggressive stimulus in March is a major disappointment and suggests that the modest pace of growth is unlikely to accelerate in coming months.”

To take note of too, a Bloomberg report that Japanese central bank officials were planning further easing measures at their 28 April policy meeting set off selling in the yen but also led to some market-chatter among traders about the 'defensive' nature of the moves seen of late from many major central banks in their attempts to try and stem deflationary forces and kick-start activity.

That report sent dollar/yen down by an out-sized 2.02% to 111.67, dragging the euro down with it to 1.1225 versus the Greenback. Sterling on the other hand leapt by an even steeper 2.49% against the Japanese currency.

Stock in Daimler dropped 4.44% after the US Department of Justice disclosed it was conducting a probe into its emissions certification process.

The carmaker's shares fell 6.02% to €62.04 having also reported its latest first quarter results.

Zodiac Aerospace rocketed 11.11% to €21.09 on reports that French rival Safran might be studying an offer to take out the aerospace supplier, whose shares had been pumelled after delivering eight warnings over the last six months.

Swedish truck maker SSAB saw its stock jump 6.29% after it lifted its forecast for the continent's truck market, although it turned more pessimistic on North America and Brazil.

Spain's Banco Sabadell saw first quarter net profits jump 2.54% following its acquisition of UK rival TSB.