By Carla Mozee, MarketWatch
European stocks closed in negative territory Thursday, as airline shares were punished after a profit warning from EasyJet PLC, but bank shares rebounded.
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +1.84% fell 0.4% to end at 342.82, relinquishing gains posted earlier in the day. The index on Wednesday dropped 0.6%, the first loss in seven sessions, following a Bloomberg report the European Central Bank was considering winding down monthly bond purchases before March, when the program was scheduled to end. The ECB had denied that such discussion took place.
ECB minutes: Minutes released Thursday from the ECB’s meeting in September showed policy makers remained focused on trying to pump up slack eurozone inflation levels.
“It was therefore seen as important to confirm the Governing Council’s commitment to the monthly asset purchases of €80 billion, which were intended to run until the end of March 2017, or beyond, if necessary, and in any case until the Governing Council saw a sustained adjustment in the path of inflation consistent with its inflation aim,” according to the ECB’s September account.
Late Thursday, ECB’s Vice President Vítor Constâncio said quantitative easing will keep running until inflation is back toward the bank’s target of below, but close, to 2%
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.2241% was pulled down to $1.1160 on the prospect of ongoing monetary stimulus. The shared currency late Wednesday bought $1.1214.
Airlines: EasyJet shares /zigman2/quotes/202825892/delayed UK:EZJ +1.66% sank 6.9% after the budget airline forecast its full-year profit could drop as much as 29%. It cited a slowing in bookings after terrorist attacks and the plunge in the pound after the Brexit vote in June.
Other airline shares struggled after EasyJet’s warning. British Airway’s parent International Consolidated Airlines Group PLC /zigman2/quotes/208070069/delayed UK:IAG +6.95% fell 3.9% and rival budget airline Ryanair Holdings PLC /zigman2/quotes/205429530/delayed IE:RY4C +1.84% gave up 1.5%. Air France-KLM SA /zigman2/quotes/205396176/delayed FR:AF +0.90% ended down 1.7% and Deutsche Lufthansa AG /zigman2/quotes/205496028/delayed DE:LHA +3.49% were off 1.4%.
On the move: The Stoxx Europe 600 Bank index /zigman2/quotes/210599339/delayed XX:SX7P +1.00% climbed 0.6%. It got a lift after Citi said Thursday it’s time to buy European bank shares as they are showing signs of moving from a so-called value trap to a value trade.
Names on Citi’s list include Spain’s BBVA /zigman2/quotes/209653399/delayed ES:BBVA +0.15% and Dutch lender ING Groep /zigman2/quotes/203351007/delayed NL:INGA +1.99% . Those shares closed up 0.8% and 1.3%, respectively.
Shares of Germany’s Deutsche Bank AG /zigman2/quotes/205584254/delayed DE:DBK +2.40% /zigman2/quotes/203042512/composite DB +2.93% gave up an earlier advance and finished 0.3% lower. The International Monetary Fund on Wednesday said it doesn’t currently foresee the embattled Deutsche Bank needing a bailout.
Osram Litcht AG /zigman2/quotes/205623891/delayed DE:OSR +0.04% rallied 10.4%, their strongest session since July 2013. The surge followed a report from German magazine WirtschaftsWoche that Sanan Optoelectronics Co. /zigman2/quotes/207632750/delayed CN:600703 +1.28% , a Chinese chip maker, is planning on making a bid for the German lighting products maker.
BOE’s Broadbent: Disorderly fall in sterling may prompt bank response
Bank of England Deputy Governor Ben Broadbent says the BOE may, in principle, have to consider raising interest rates to arrest a severe sterling slide. But he says the pound’s decline so far has been “orderly.”
Italy’s FTSE MIB ended up 0.1% at 16,491.62 and Spain’s IBEX 35 /zigman2/quotes/210597995/delayed XX:IBEX +1.86% moved down 0.2% to 8,757.40.
Data: German manufacturing orders rose by a more-than-expected 1% in August.