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April 6, 2017, 12:06 p.m. EDT

European stocks eke out small gain ahead of Trump-Xi meeting

Draghi says ECB’s accommodative stance still appropriate

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By Carla Mozee and Sara Sjolin, MarketWatch

AFP/Getty Images
Federal Reserve Chairwoman Janet Yellen with European Central Bank President Mario Draghi at the G7 Central Bank Governors' Meeting in May 2016.

European stocks ended slightly higher on Thursday, after swinging between gains and losses through the session, as investors were reluctant to take any big risks ahead of a summit between U.S. President Donald Trump and his Chinese counterpart Xi Jinping.

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.02%  rose 0.2% to close at 380.77, after trading as low as 377.16 earlier in the day.The pan-European index closed only fractionally higher on Wednesday.

“At least there is the chance for fireworks in the next 24 hours,” said Connor Campbell, financial analyst at Spreadex, in a note. “Trump’s behavior when meeting his international counterparts has moved the markets in the past.”

“If the Trump-Xi conflab does somehow fail to produce anything of interest then there is still tomorrow’s nonfarm jobs figures to spark some excitement, the report arguably growing in importance following Wednesday’s Fed meeting minutes,” he added.

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Minutes of the Fed’s March meeting out showed policy makers plan to begin winding down its $4.5 trillion balance sheet this year. The report came out after the European markets closed on Wednesday, sending them lower at Thursday’s open.

“It has come as a minor shock” that the Fed wants to start the reduction in 2017, which appears to have been earlier than the market had been expecting, said Richard Perry, market analyst at Hantec Markets, in a note.

“This would be the continuation of winding down the QE program and make the Fed less accommodative,” said Perry.

U.S. stocks closed lower on Wednesday, and struggled for direction in Thursday’s trade.

While the Fed is looking to curb its balance sheet, European Central Bank President Mario Draghi said in a speech Thursday the central bank’s accommodative stance remains appropriate as “we are not yet at a stage when inflation dynamics can be self-sustaining without monetary policy support.”

With Draghi ruling out an imminent interest-rate increase, the euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.1346%  briefly fell to a three-week low against the dollar. It later moved to $1.0649 compared with $1.0665 late Wednesday in New York.

Read: Here’s Draghi’s 4-point checklist for when it’s time for the ECB to hike interest rates

A lower euro can boost European equities as it can make products by European companies less expensive to purchase by overseas clients.

Minutes from the ECB’s March meeting out later on Thursday showed the Governing Council is split over the strength of the economic recovery and how aggressively to end its easing program.

Movers: Unilever PLC /zigman2/quotes/205449809/delayed UK:ULVR -0.16%   /zigman2/quotes/204685760/composite UL +0.26%  rose 1% after the consumer goods heavyweight said it would launch a €5 billion share buyback program this year, raise its dividend by 12%, and divest its spreads division. The moves come as a result of a strategic review after Unilever rejected a $143 billion takeover offer from Kraft Heinz Co. /zigman2/quotes/203625533/composite KHC 0.00%  .

Freenet AG /zigman2/quotes/207604963/delayed DE:FNTN -0.41%  fell 2.6% after the German mobile phone operator’s rating was downgraded to sell from hold at Berenberg.

BTG PLC  added 2.5% as the pharmaceutical group, whose drugs include a treatment for varicose veins, said it expects fiscal 2017 revenue will come in at or above the top end of expectations.

Indexes: Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX +0.01% ended 0.1% higher at 12,230.89. France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.08% climbed 0.6% to 5,121.44, buoyed by Total SA   /zigman2/quotes/208266478/delayed CA:FP -4.65%  rising 1.1% alongside a jump in oil prices.

The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.27% gave up 0.4% to 7,303.20.

Data: German manufacturing orders rose 3.4% in February, led by domestic demand, but foreign demand was flat.

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-0.11 -0.02%
Volume: 0.00
Nov. 25, 2022 11:03p
US : Tullett Prebon
+0.0014 +0.1346%
Volume: 0.0000
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UK : U.K.: London
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Nov. 25, 2022 1:10p
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Nov. 25, 2022 1:00p
P/E Ratio
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Nov. 25, 2022 10:59p
P/E Ratio
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Carla Mozée is a reporter for MarketWatch, based in London. Follow her on Twitter @MWMozee. Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.

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