By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stocks ended mostly lower Thursday, failing to hold on to a rebound into positive territory after European Central Bank President Mario Draghi cited improved financial market conditions across the euro zone.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.46% fell 0.2% to close at 283.88, after trading as high as 286.20 after Draghi spoke.
Goldman Sachs's top stock picks
In a recent report, investment bank Goldman Sachs & Co. published a list of the stocks with the greatest upside potential. Photo: AP
Among major movers in the index, shares of Alcatel-Lucent gave up early gains to drop 4.9%. The telecom-equipment maker said Chief Executive Ben Verwaayen will step down from his post and the company’s board, after profit and revenue declined in the fourth quarter. See: Alcatel-Lucent CEO to step down, profit slides.
Meanwhile, heavyweight Vodafone Group PLC /zigman2/quotes/202484985/delayed UK:VOD -0.05% /zigman2/quotes/202862751/composite VOD -0.19% added 0.9% after affirming its annual guidance for adjusted operating profit and free cash flow, even as the wireless-telecom firm reported a 2% drop in third-quarter revenue. See: Vodafone's sales hit by tough market in Europe.
Credit Suisse Group AG /zigman2/quotes/205269278/delayed CH:CSGN +0.42% fell 2.6%, even as the bank said it returned to profit in the fourth quarter, as robust markets and cost savings helped its performance. See: Credit Suisse returns to profit in 4Q
Central bank meetings
ECB President Mario Draghi said the euro-zone economy should begin to recover later this year partly due to the bank’s “accommodative” monetary policy. The central bank left its key lending rate unchanged at 0.75% as expected and made no changes to other key rates. See: Draghi: Euro reflects confidence, but watching inflation impact.
The euro tumbled as Draghi said the ECB would watch any further currency appreciation for signs its impacting the bank’s inflation outlook, although he also noted that the euro’s nominal and real exchange rates remained near long-term averages and said recent strength reflected renewed confidence in the shared currency. See: Euro tumbles ad Draghi talks it down.
“It was a fairly dovish statement and more dovish than some people had expected. It was made pretty clear that if money-market conditions start to tighten the ECB could cut rates. So it means the risk of a rate hike is not imminent,“ said Jens Larsen, chief European economist at RBC Capital Markets.
“We’re in a scenario where the ECB is in a position to intervene and that makes a big difference. So we are still worried about Spain and Italy, but not as much as we were a year ago,” he said.
The Bank of England also stood pat and left its left lending rate at a record low 0.5%, where it’s stood since March 2009, and maintained the size of its paused asset-purchase program at 375 billion pounds ($587.4 billion).
The U.K.’s FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.20% dropped more than 1% to 6,228.42, with shares of luxury-goods firm Burberry Group PLC /zigman2/quotes/205386705/delayed UK:BRBY +1.17% /zigman2/quotes/203108786/composite BURBY +0.81% off 6.5%. The company said Executive Vice President and Chief Financial Officer Stacey Cartwright will step down to pursue other interests, after more than nine years with Burberry. See: Burberry CFO steps down.
In the U.S. news flow, data showed jobless claims fell by 5,000 last week, which was less than analysts expected. See: U.S. jobless claims drop slightly to 366,000.
Additionally, U.S. productivity fell 2% in the fourth quarter, coming in higher than expectations of a 1.5% decline. See: U.S. productivity sinks 2.0% in fourth quarter.
U.S. stocks were lower on Wall Street. See: U.S. stocks drop after economic data.
Spain’s financial markets were also in the limelight as the government reportedly sold 4.6 billion euros ($6.25 billion) in public debt, above the €3.5 billion to €4.5 billion target range. Borrowing costs, however, went up compared with previous auctions as political uncertainty over a corruption scandal hampered investor confidence in the country. See: Spanish PM says corruption claim false: reports
In the secondary market, the yield on 10-year Spanish government bonds fell 0.02 percentage point to 5.40%, according to electronic trading platform Tradeweb.
The IBEX 35 index /zigman2/quotes/210597995/delayed XX:IBEX -0.42% fell 0.1%, with Banco Santander SA /zigman2/quotes/205677933/delayed ES:SAN -0.95% /zigman2/quotes/202859081/composite SAN -0.26% down 0.2%.
Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX +0.46% gained 0.1% to 7,590.85. HeidelbergCement AG /zigman2/quotes/202418791/delayed DE:HEI +0.19% put on 5.1%, as it posted a 6.5% rise in fourth-quarter revenue and a 10.9% improvement in operating income.
In France, the CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 +0.71% fell 1.1% to 3,601.05.
Shares of Sanofi SA /zigman2/quotes/206928357/delayed FR:SAN +1.38% shaved off 4%, after the drug maker said fourth-quarter profit sank 72%, hurt by competition from generic drugs. It further said it doesn’t expect growth to return before the second half of the year. See: Sanofi profit slips 72%; downbeat on growth.