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Jan. 11, 2018, 12:58 p.m. EST

European stocks drop as retailers fall, euro leaps on hawkish ECB prospects

ECB may soon revisit monetary policy; Germany’s GDP grows more than 2% in 2017

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By Carla Mozee, MarketWatch


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Pandora shares slid nearly 11% Thursday.

European stocks finished at their lowest in a week Thursday, as investors considered a signal from the European Central Bank that it’s positioning for a more hawkish view on monetary policy.

Retailers, meanwhile, struggled after the release of disappointing financial updates from the sector that included the key Christmas shopping period.

How did markets fare?

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.10% fell 0.3% to 397.25, its weakest finish since Jan. 4 and a second straight loss, according to FactSet data. The telecom, tech and consumer-services sectors lost the most, but commodity-related and financial shares were top gainers. On Wednesday, the pan-European index fell 0.4%, pulling back from a 2½-year high.

Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX -0.12%  declined 0.6% to end at 13,202.90, and France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.42%  turned lower, finishing down by 0.3% at 5,488.55.

The U.K.’s FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.20% logged a record close by rising 0.2% to 7,762.94. Spain’s IBEX 35 /zigman2/quotes/210597995/delayed XX:IBEX -0.50%  edged up 0.1% to 10,435.20.

Read: These 5 charts are all ‘flashing green’ for more U.K. stock records

The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.0360%  zoomed up to $1.2037 from $1.1949 late Wednesday in New York.

The yield for the 10-year German government bund /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y -6.06% turned higher, rising 4 basis points to 0.515%, according to Tradeweb. Yields rise when prices fall.

What drove markets?

Stocks pulled back while the euro leapt against major rivals after minutes from the ECB’s December meeting suggested policy makers may be poised to tweak their ultraloose monetary policy efforts, which have weighed on the shared currency.

“The language pertaining to various dimensions of the monetary policy stance and forward guidance could be revisited early in the coming year,” according to the minutes.

Reconsideration could take place if the eurozone economy continues to expand and if inflation keeps rising toward the bank’s target around 2%, the minutes said.

The ECB, led by President Mario Draghi, in December confirmed its plan to halve its quantitative easing program to €30 billion starting this month, and to let it run until the end of September 2018 or “beyond.” The central bank meets next on Jan. 25.

Meanwhile, a number of retail stocks were punished after trading updates, including Danish jeweler Pandora A/S and Britain’s Marks & Spencer PLC.

/zigman2/quotes/210599654/delayed
XX : STOXX
393.08
-0.38 -0.10%
Volume: 0.00
Oct. 17, 2019 5:50p
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
12,654.95
-15.16 -0.12%
Volume: 99,302
Oct. 17, 2019 6:30p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
5,673.07
-23.83 -0.42%
Volume: 88,695
Oct. 17, 2019 6:05p
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,182.32
+14.37 +0.20%
Volume: 1.09M
Oct. 17, 2019 4:59p
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/zigman2/quotes/210597995/delayed
XX : Spain: Madrid
9,340.00
-46.70 -0.50%
Volume: 195.29M
Oct. 17, 2019 5:38p
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/zigman2/quotes/210561242/realtime/sampled
US : Tullet Prebon
1.1128
+0.0004 +0.0360%
Volume: 0.0000
Oct. 18, 2019 12:11a
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/zigman2/quotes/211347112/realtime
add Add to watchlist BX:TMBMKDE-10Y
BX : Tullet Prebon
-0.41
-0.02 -6.06%
Volume: 0.00
Oct. 17, 2019 6:02p
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