Investor Alert

Europe Markets

Dec. 13, 2018, 2:16 p.m. EST

Italy stocks stand out in Europe, where ECB grabs the spotlight

GAM slumps in Switzerland after scrapping dividend

By Emily Horton

Getty Images

Europe markets ended mostly lower on Thursday, as investors turned their attention to a European Central Bank meeting and Brexit issues, with optimism over global trade taking a back seat.

How are markets trading?

The Stoxx Europe 600 (STOXX:XX:SXXP) gave up 0.2% to end at 349.42, after closing up 1.7% on Wednesday.

Germany’s DAX 30 (XEX:DX:DAX) edged less than 0.1% lower to 10,924.70, while France’s CAC (PAR:FR:PX1) shed 0.3% to 4,896.92. The U.K.’s FTSE 100 (FTSE:UK:UKX)  declined less than 0.1% to 6,877.50, after finishing up 1% on Wednesday.

The day’s best performer was Spain’s IBEX 35 index (1058:XX:IBEX) , which rose 0.8%, while Italy’s FTSE MIB Italy index (BORSA:IT:I945) ended 0.5% higher at 19,048.83.

What is driving the markets?

The European Central Bank left key rates unchanged, and said it expects policy to stay at current levels through summer 2019. The bank also affirmed plans to end monthly asset purchases at the end of the month, while continuing to fully reinvest the proceeds from maturing securities held on its balance sheet for a period well beyond when it begins to raise interest rates. In a news conference, ECB President Mario Draghi said risks to the eurozone’s economic outlook remained “broadly balanced” but were moving to the downside.

Read: Here’s how ECB’s Mario Draghi walked the tightrope between caution and confidence

British Prime Minister Theresa May survived her leadership challenge, late on Wednesday evening, successfully suppressing a damaging rebellion within her party, but leaving her in a politically weakened state with further questions over Brexit added.

Positive trade talks between the U.S. and China boosted Wall Street trading on Wednesday. U.S. stocks saw gains early Thursday but then turned modestly lower.

Italian stock and bonds rose after the government has agreed to trim its budget deficit forecast for next year, which reduces the risk of a clash with the EU. “But this does not spell the end of its fiscal troubles. With the country’s economic prospects bleak, government debt still looks unsustainable in the long run,” said analysts at Capital Economics, in a note.

What stocks are active?

Among the big gainers, German travel giant TUI AG (FRA:DE:TUI1)  rose 4.3% after the company posted a rise in net profit.

UniCredit SpA (MIL:IT:UCG)  rose 1.2%, while Banco Santander SA (MCE:ES:SAN)   (NYS:SAN)  gained 1.5%.

Security services company G4S PLC announced it is considering separating out its Cash Solutions businesses, leading to a 6.8% rise.

One of the biggest losers in Europe was the German retailer METRO AG (FRA:DE:B4B) , which lost 11% after it reported a slight drop in overall sales.

Away from the Stoxx Europe 600, Swiss-based GAM Holding AG (SWX:CH:GAM)  slumped 22% after the asset manager announced a restructuring program and suspended its 2018 dividend.

In oil stocks Tullow Oil PLC (LON:UK:TLW)  fell by just under 3% and heavyweight BP PLC  declined 0.4%.

— Barbara Kollmeyer contributed to this report

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