Europe midday: Stocks mostly lower as investors mull Draghi comments ahead of ECB minutes
European stocks were mostly lower on Thursday as investors exercised caution ahead of the Trump-Xi summit in the US and mulled comments from the European Central Bank chief.
At midday, the benchmark Stoxx Europe 600 index fell 0.21% to 379.31 and Germany’s DAX declined 0.25% to 12,187.05, but France’s CAC was 0.16% firmer at 5,099.78.
Meanwhile, Brent crude was up 0.2% to $54.47 per barrel and West Texas Intermediate rose 0.13% to $51.22.
The euro fell to a three-week low against the dollar after ECB president Mario Draghi ruled out a forthcoming interest rate hike on Wednesday. The single currency declined to 1.0643, its lowest level since 14 March, from 1.0665.
At midday, the euro was flat against the dollar at 1.0666 and up 0.23% versus the pound at 0.8562.
Speaking in Frankfurt, Draghi told an audience it was "too soon to declare success on inflation", adding that there was scant evidence inflation was headed towards the ECB's goal in a sustained manner.
Yet for all his reassurances, investors were focused instead on the overnight fall in stocks on Wall Street as the minutes of the Federal Reserve's policy meeting revealed the central bank had already discussed allowing its $4.5trn balance sheet to shrink later in 2017 - which means further policy tightening - at length and sooner than some believed.
The ECB will release minutes from its March policy meeting at 1230 BST.
Investors had priced in a rate hike in around December following hawkish comments at the ECB’s March meeting, however some central bank officials recently told Reuters that they were over-interpreted and they will continue with loose monetary policies.
The ECB's quantitative easing programme contains monthly asset purchases of €60bn until December, tapering from January 2018 and a first rate hike in September 2019.
Market participants were also looking ahead to US president Donald Trump’s meeting with Chinese counterpart Xi Jinping at Trump’s Mar-a-Lago resort in Florida for a two-day summit.
On the data front, German factory orders rose 3.4% in February, going a long way to unwinding January’s sharp 6.8% drop and below the 4% consensus forecasts.The year-over-year rate increased to 4.6% from 0.0% in January.
Markit’s eurozone retail purchasing managers' index fell to 49.5 in March, from 49.9 in February. Readings of 50 and above indicate expansion while those below denote contraction.
In corporate news, Freenet was down 3.59% after Berenberg downgraded the German mobile phone operator to ‘sell’ from ‘hold’.
French and German insurers retreated after European regulators said they would lower the interest rate they use to calculate their liabilities, which may entail higher capital requirements for some of them.
AXA was down 0.65%, Coface fell 0.55%, and Allianz slipped 0.49%.