Europe midday: Stocks fall for first time in seven days as investors eye ECB comments

European stocks declined for the first time in seven days on Thursday as investors awaited the European Central Bank’s policy decision.

At midday, the Stoxx Europe 600 index was down 0.38% to 387.25 with miners leading the losses as metal prices fell. Germany’s DAX slipped 0.19% to 12,449.19 and France’s CAC was 0.3% weaker at 5,272.06.

Meanwhile, Brent crude was down 0.91% to $51.35 per barrel and West Texas Intermediate fell 0.93% to $49.16.

It is a big day for the euro, with the ECB announcing its latest policy decision at 1245 BST followed by a press conference with the bank’s president Mario Draghi at 1330 BST.

The single currency had rallied against the dollar this week after Emmanuel Macron won the first round of the French election at the weekend, but retreated on Thursday.

The euro was flat versus the dollar to 1.0897, and fell 0.45% against the pound to 0.84487, but rose 0.2% against the yen to 121.33.

Investors will eye the ECB meeting for any indications that its policy has changed. Economic circumstances in the eurozone have improved lately and in turn opposition to the ECB’s quantitative easing policy has intensified, although core inflation remains stagnant.

Draghi has previously pushed back against the suggestion that the ECB has even discussed an end to QE, analysts at Monex Europe said.

Meanwhile, Craig Erlam, senior market analyst at Oanda, said he expects the ECB to leave its policy unchanged, with the June meeting being seen as the most likely point at which the central bank will seriously consider a further removal of stimulus.

"While it’s unlikely that another reduction in asset purchases or a rate hike will happen until the end of the year, the central bank may allude to such a move earlier but I think today’s meeting is a little too soon.

“Mario Draghi may have been keen to stress that the previous reduction is not tapering, but I think it’s clear that the central bank has started a process of removing stimulus in much the same way that its US counterpart did. The only difference is that it’s being less explicit with its plans and the process will be far more gradual. The problem that the ECB is facing is that core inflation is still well below its target of below but close to 2% and there still exists a two-tier eurozone with some countries in a far better position for monetary tightening and others still in need of substantial easing,” he said.

Earlier, data revealed that consumer optimism in Europe’s largest economy was on the rise. GfK’s consumer confidence index rose to 10.2 in May from 9.8 the month earlier and was ahead of the 9.9 reading expected.

A preliminary estimate for German CPI in April will be released at 1300 BST.

Meanwhile, a lack of detail meant the Trump administration's US tax announcement on Wednesday failed to get investors excited. Corporation tax is to be slashed to 15% from 35%, the seven tax brackets will be reduced to three and the alternative minimum tax would be cut, with nearly all of the current tax deductions eliminated.

In corporate news, Deutsche Bank fell 2.65% after the lender missed revenue expectations but posted a rise in profit.

Deutsche Lufthansa dropped 3.44% despite the German airline swinging to a €25m first-quarter profit.

Bayer AG gained 3.54% after the German pharmaceutical posted 38% rise in first quarter profit and raised its outlook for the year.