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March 9, 2017, 12:30 p.m. EST

Bank stocks help European markets end higher as Draghi plays down deflationary risks

Akzo Nobel rallies after rejecting takeover bid

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By Carla Mozee and Victor Reklaitis, MarketWatch


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European Central Bank President Mario Draghi.

European stocks finished modestly higher Thursday, with bank shares charging up as European Central Bank Mario Draghi suggested deflationary pressures have lessened, though energy shares lost ground as oil prices slid.

The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.02% rose 0.1% to close at 372.89, building on Wednesday’s 0.1% gain.

The pan-European index had been down 0.3% as Draghi started his Thursday afternoon news conference in Frankfurt. But bank shares began to stage a turnaround, pushing the Stoxx Europe 600 Bank Index /zigman2/quotes/210599339/delayed XX:SX7P +0.14%  higher by 1.1%.

Draghi said the ECB removed language from his previous statements that had said the bank would act, if warranted, to achieve its inflation objectives by using all the instruments available within its mandate. Now, “that urgency that was prompted by the risks of deflation isn’t there,” spurring the change, he said.

A drop in interest rates to record lows and negative levels has been among the instruments employed by the ECB, and low rates have hurt profit margins at European banks.

Among bank shares, Germany’s Deutsche Bank AG /zigman2/quotes/205584254/delayed DE:DBK +1.05%  climbed 1.4%, Spain’s Banco Santander SA /zigman2/quotes/205677933/delayed ES:SAN +1.72%  advanced 2.5%, and France’s Société Générale SA /zigman2/quotes/206663756/delayed FR:GLE -0.29%  tacked on 2.1%.

“European political uncertainty and still-low core inflation will continue to argue for policy maker caution for several more months, but improving labor markets and better growth dynamics across the currency union should at least allow for more positive policy discourse,” wrote Tim Graf, head of macro strategy at State Street Global Markets.

Before Draghi’s news conference, the ECB left its key interest rates unchanged, meeting widely held expectations.

In the fixed-income market, the yield on the 10-year German bund /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y 0.00%  was pulled up 5 basis points to 0.42%, according to Tradeweb. European bond prices fell as Draghi said a “sense of urgency” over the potential need to take further action to support the eurozone economy has dissipated.

The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.1346%  scaled up to an intraday high of $1.0617, up from $1.0546 late Wednesday in New York. It was recently at $1.0584.

Read: How eurozone breakup fears are creeping back into the market — in one chart

Energy: Oil and gas shares /zigman2/quotes/210599627/delayed XX:SXEP +0.69%  lost ground as crude prices  suddenly swung lower, pushing West Texas Intermediate oil  below $49 a barrel for the first time this year.

The Stoxx Europe 600 Oil & Gas Index /zigman2/quotes/210599627/delayed XX:SXEP +0.69%  dropped 1.5%.

Movers: Akzo Nobel NV shares /zigman2/quotes/209835399/delayed NL:AKZA -0.54%   /zigman2/quotes/204497961/composite AKZOY +0.95%  rallied 13% after the Dutch maker of Dulux paint and other products rejected a €20.9 billion ($22.1 billion) unsolicited offer from PPG Industries Inc. /zigman2/quotes/202418877/composite PPG +0.23%  .

Carrefour SA /zigman2/quotes/208564127/delayed FR:CA -0.15%  fell 4% after the retailer said net profit fell in 2016, hurt by declining sales in Asia and its home market of France.

Merck KGaA shares /zigman2/quotes/209909728/delayed XE:MRK +0.03%  pulled back 2.7% as the German pharmaceuticals and chemicals issued a cautious outlook for 2017. The company’s fourth-quarter net profit more than doubled.

Aviva PLC  charged up 6.5% after the insurer raised its dividend by 12% and said it’s considering returning more capital to shareholders this year.

Indexes: Germany’s DAX 30 /zigman2/quotes/210597999/delayed DX:DAX +0.01%  finished up 0.1% at 11,978.39, and France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.08% gained 0.4% to 4,981.51. But the U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.27%  fell 0.3% to end at 7,314.96, hurt by drops for commodities stocks.

/zigman2/quotes/210599654/delayed
XX : STOXX
440.73
-0.11 -0.02%
Volume: 0.00
Nov. 25, 2022 11:03p
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/zigman2/quotes/210599339/delayed
XX : STOXX
139.80
+0.19 +0.14%
Volume: 0.00
Nov. 25, 2022 11:03p
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/zigman2/quotes/205584254/delayed
DE : Germany: Frankfurt
10.36
+0.11 +1.05%
Volume: 40,812
Nov. 25, 2022 10:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€417,912
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/zigman2/quotes/205677933/delayed
ES : Spain: Madrid
2.83
+0.05 +1.72%
Volume: 45.81M
Nov. 25, 2022 5:38p
P/E Ratio
5.41
Dividend Yield
3.14%
Market Cap
€47.51 billion
Rev. per Employee
€426,767
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/zigman2/quotes/206663756/delayed
FR : France: Euronext Paris
24.30
-0.07 -0.29%
Volume: 1.58M
Nov. 25, 2022 5:39p
P/E Ratio
8.20
Dividend Yield
6.79%
Market Cap
€18.85 billion
Rev. per Employee
€252,098
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/zigman2/quotes/211347112/realtime
add Add to watchlist BX:TMBMKDE-10Y
BX : Tullett Prebon
1.98
0.00 0.00%
Volume: 0.00
Nov. 25, 2022 6:00p
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/zigman2/quotes/210561242/realtime/sampled
US : Tullett Prebon
1.0415
+0.0014 +0.1346%
Volume: 0.0000
Nov. 25, 2022 4:59p
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/zigman2/quotes/210599627/delayed
XX : STOXX
354.47
+2.43 +0.69%
Volume: 0.00
Nov. 25, 2022 11:03p
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/zigman2/quotes/210599627/delayed
XX : STOXX
354.47
+2.43 +0.69%
Volume: 0.00
Nov. 25, 2022 11:03p
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/zigman2/quotes/209835399/delayed
NL : Netherlands: Euronext Amsterdam
70.06
-0.38 -0.54%
Volume: 359,152
Nov. 25, 2022 5:35p
P/E Ratio
23.49
Dividend Yield
2.83%
Market Cap
€12.37 billion
Rev. per Employee
€324,482
loading...
/zigman2/quotes/204497961/composite
US : U.S.: OTC
$ 24.41
+0.23 +0.95%
Volume: 74,359
Nov. 25, 2022 12:59p
P/E Ratio
22.35
Dividend Yield
2.22%
Market Cap
$12.87 billion
Rev. per Employee
$350,514
loading...
/zigman2/quotes/202418877/composite
US : U.S.: NYSE
$ 133.36
+0.30 +0.23%
Volume: 320,312
Nov. 25, 2022 3:30p
P/E Ratio
29.52
Dividend Yield
1.86%
Market Cap
$31.34 billion
Rev. per Employee
$358,154
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/zigman2/quotes/208564127/delayed
FR : France: Euronext Paris
16.55
-0.03 -0.15%
Volume: 993,725
Nov. 25, 2022 5:35p
P/E Ratio
12.51
Dividend Yield
3.14%
Market Cap
€12.12 billion
Rev. per Employee
€247,292
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/zigman2/quotes/209909728/delayed
XE : Germany: Xetra
175.90
+0.05 +0.03%
Volume: 154,342
Nov. 25, 2022 6:30p
P/E Ratio
22.03
Dividend Yield
1.05%
Market Cap
€76.48 billion
Rev. per Employee
€361,073
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
14,541.38
+1.82 +0.01%
Volume: 46,218
Nov. 25, 2022 6:30p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
6,712.48
+5.16 +0.08%
Volume: 47,928
Nov. 25, 2022 6:05p
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,486.67
+20.07 +0.27%
Volume: 445,496
Nov. 25, 2022 4:57p
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Carla Mozée is a reporter for MarketWatch, based in London. Follow her on Twitter @MWMozee. Victor Reklaitis is a London-based markets writer for MarketWatch. Follow him on Twitter @VicRek.

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