Europe midday: Stocks edge lower ahead of ECB announcement

At midday, the benchmark Stoxx 600 index and France’s CAC 40 were both down 0.6%, while Germany’s DAX was 0.5% weaker.

The ECB is widely expected to keep interest rates and monetary policy unchanged, but investors are hoping chief Mario Draghi will underline his support for ultra-loose monetary policy measures and a commitment to bringing inflation back to target.

At the March policy meeting, the ECB unveiled a package of measures that saw all three main policy rates cut and a cut in the deposit rate to -0.40%. The monthly pace of asset purchases was increased by €20bn to €80bn and the scope of the programme was expanded to include non-financial investment grade corporate bonds.

Draghi also announced a further four TLTROs with four-year maturities, to be launched in June.

“Six weeks on and it’s unlikely that the ECB will be prepared to deliver any further measures. Today’s announcement is expected to be one of words rather than action with the ECB in a wait-and-see mode, at least for now. As noted by Draghi earlier this month, it will take time for these latest measures to start working their way through the economy and delivering their full benefit,” said Atif Latif, director of trading at Guardian Stockbrokers.

“Although the ECB is expected to keep its policy stance unchanged today, there is a growing consensus that it is not done yet with economists highlighting September as the likely date for further stimulus. As such, today’s announcement will be watched closely for any clues regarding future policy options, especially with regards to rates.”

Meanwhile, oil prices were hovering near the flat line, having gained earlier after the International Energy Agency said this year would see the biggest drop in non-OPEC production in a generation.

West Texas Intermediate was up 0.1% to $44.24 while Brent crude was 0.2% higher at $45.89.

On the corporate front, shares in beleaguered German car maker Volkswagen rallied after Reuters cited sources as saying that VW and US officials had reached a framework deal under which the car maker would offer to buy back almost 500,000 diesel cars that used software to cheat US emission rules.

On the downside, French spirit maker Pernod Ricard slumped after posting a 3% decline in third-quarter sales.

Swedish mobile telecom equipment maker Ericsson was firmly in the red after its first-quarter sales and operating profit missed analysts’ expectations.

London-listed broadcaster Sky was under the cosh after it said customer growth slowed in the third quarter.

The ECB rate announcement is at 1245 BST, with the press conference at 1330 BST. In the US, initial jobless claims and the Philadelphia Fed survey are at 1330 BST.