Europe close: Jump in single currency after Draghi speaks takes it toll
A more confident tone from European Central Bank chief Mario Draghi and a profit warning from a German auto parts maker combined to send stocks lower across the Continent.
At the closing bell the benchmark Stoxx 600 was 0.79% or 3.07 points lower at 385.98, while the German Dax was down by 0.78% or 99.81 points to 12,671.02 and the Cac-40 was on its backfoot, slipping 0.70% or 37.17 points to 5,258.58.
"ECB President Mario Draghi today gave some clear signals that the doves on the Governing Council may be retreating from their uber-dovish stance. This supports our baseline view of a fairly quick taper of QE next year.
"But we still anticipate a slow pace of policy rate normalisation thereafter and no refinancing rate hikes during his term as President which ends in October 2019," sad Ben May at Oxford Economics.
Delivering the introductory speech at the European Central Bank's forum in Sintra, Portugal Draghi said inflation in the euro area was being dragged down by "transitory" factors.
Banks, euro get boost, government bond yields spike
Banks outperformed with the Stoxx 600 gauge of lenders' shares closing up by 0.79% to 180.64 as Draghi's remarks saw 10-year German bund yields rocket 13 basis points to 0.37%, while those on similarly-dated Italian debt were shot up by 16 basis points to 2.06%.
The single currency also got a boost in its cross against the US dollar, jumping 1.14% to 1.1311.
Going in the other direction, a profit warning from the German manufacturer of bearings for use in the automotive and aerospace industries, Schaeffler drove the Stoxx 600 subindex of Auto and parts manufacturers down by 1.57% to 546.71.
Acting as a backdrop, speaking at the World Economic Forum overnight Chinese premier Li Keqiang said China was able of achieving the government's target for 6.5% growth in gross domestic product in 2017, while keeping systemic risks under control.
ISTAT's Italian consumer confidence index jumped from 105.4 in May to 106.4 for June, boosted by stronger readings in all its subcomponents.
A separate index tracking the business climate in the euro area's third largest economy increased from 106.2 in the month before to 106.4 for June.
Ratings agency Moody's said Intesa Sanpaolo's acquisition of the good assets of Banca Veneto and Banca Popolare di Vicenza was a credit positive event.
Meanwhile, in Spain, recently rescued lender Bankia took over Banco Mare Nostrum in all-shares deal valuing the latter at €825m.
Shares in Stada plummeted on news that private equity groups Bain Capital and Cinven failed to win the requisite amount of shareholder acceptances.