A trader working on the floor of the New York Stock Exchange yesterday.
LONDON: European equities fell yesterday after the ECB and Bank of England kept interest rates on hold and held off providing more monetary stimulus to the fragile economic recovery, dealers said.
London’s FTSE 100 index of top companies shed 1.30 percent to finish at 6,336.11 points, Frankfurt’s DAX 30 index lost 1.19 percent to 8,098.81 points, while in Paris the CAC 40 dropped 0.99 percent to end at 3,814.28 points.
The European Central Bank kept its key refinancing rate unchanged at an all-time low of 0.50 percent in a widely anticipated move, after cutting rates by a quarter of a percentage point last month.
A negative deposit rate at the ECB would encourage banks to put funds to use and speculation has been mounting the central bank could resort to such an unconventional measure rather than quantitative easing.
The Bank of England also as expected kept its main interest rate at 0.50 percent, where it has stood for more than four years.
It also chose not to undertake any additional quantitative easing to support the fragile recovery of the British economy. Under the measure central banks create cash to buy assets, freeing up bank funds to lend and hopefully stimulate the economy.
Nick Dale-Lace, a trader at CMC Markets UK, said some investors had also begun taking long positions in the hope for a market rebound. “With the FTSE 500 points from its highs, the long awaited correction is now being viewed in some quarters as overdone, with no firm indication from the Fed that the asset purchase programme is nearing its conclusion,” he said, referring to fears that the Fed will begin cutting monetary stimulus.
While little prospect of further support for the economy from the ECB hurt stock prices, it boosted the euro, which climbed to $1.3247 from $1.3089 late in New York on Wednesday.
The dollar slid to 97.82 yen from 99.16 yen a day earlier.
In trading on the London Bullion Market, the price of gold shrank to $1,400.00 an ounce on Thursday, from $1,404.00 on Wednesday.
The Dow Jones Industrial Average was down 0.29 percent at 14,916.82 points, while the broad-based S&P 500 fell 0.14 percent at 1,606.57 and the tech-rich Nasdaq Composite shed 0.12 percent to 3,397.36.
“Traders may be tempted to sit on their hands in the short term with the NFP due for release tomorrow,” said Mike McCudden, head of derivatives at stockbroker Interactive Investor.
Asian markets sank following an overnight sell-off on Wall Street, where dealers were spooked as weaker-than-expected data on private jobs creation underscored weakness in the US economy. Tokyo stocks fell 0.85 percent, extending an almost four percent decline on Wednesday due to disappointment at Prime Minister Shinzo Abe’s latest plan to boost the economy. AFP
