EUROPE MARKETS: European Close In The Red As Yellen Disappoints Ahead Of Draghi Speech

By Sara Sjolin, MarketWatch Features Dow Jones Newswires

Draghi due at 8 p.m. London time; Provident Financial rallies 20% after plunge

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European stock markets finished Friday's session by swinging into the red, pulling back as U.S. Federal Reserve Chairwoman Janet Yellen gave nothing away about the path forward for monetary policy in the world's largest economy.

The Stoxx Europe 600 index wrapped up a choppy session by losing 0.1% to 374.07. That move was led by declines for consumer services and telecom shares. But gains for commodity stocks softened a bigger blow for the pan-European benchmark.

Still, the index gave up potential gains for the week, ending down by less than 0.1%.

Stocks declined Friday while the euro charged higher, toward $1.19 against the dollar . Shares of European exporters can be hurt by euro strength as it can erode revenue made overseas by European companies and can make their products more expensive to buy for international clients.

The greenback was bruised as Federal Reserve Chairwoman Janet Yellen, at her speech at the Jackson Hole Symposium in Wyoming, offered no clues about interest rates or tapering the Fed's massive balance sheet, although many analysts had projected Yellen to remain tight lipped about policy before the Fed's next meeting in September.

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Read MarketWatch's live blog on the Jackson Hole conference (http://blogs.marketwatch.com/capitolreport/2017/08/25/jackson-hole-fed-conference-live-blog-yellen-draghi-on-tap/)

The euro jumped to an intraday high of $1.1885 in response to Yellen. It later moved to $1.1870, but that was still a climb from $1.1800 late Thursday in New York.

European Central Bank President Mario Draghi was set to speak at 8 p.m. London time, or 3 p.m. Eastern Time. The ECB is facing questions about when and how it will start winding down its asset-purchase program of EUR60 billion a month as economic conditions in the eurozone have improved.

"The European Central Bank chief is tipped not to be covering tapering of the bond-buying scheme, but traders will be paying close attention," to Draghi at Jackson Hole, wrote CMC Markets analyst David Madden late Friday.

"The ECB can't keep up this rate of buying government bonds indefinitely, so Mr. Draghi must come up with an alternative solution to keep the monetary policy loose, without running out of government bonds to buy,"

Ahead of Draghi's speech, the yield on Germany's 10-year bund rose less than 1 basis point at 0.38%, according to Tradeweb data.

"The ECB will want to avoid any sharp appreciation in the currency and a similar rise in bond yields at all costs," said Craig Erlam, senior market analyst at Oanda, in a note. "If anything, Draghi may deliver a rather dovish message that still leaves the door open to tapering at the end of the year while carefully managing the euro lower," he added.

The meeting, hosted by the Kansas Federal Reserve, runs through Saturday.

Read:Fed watchers still fret about policy missteps as Jackson Hole gets under way (http://www.marketwatch.com/story/fed-watchers-still-fret-about-policy-missteps-as-jackson-hole-gets-under-way-2017-08-24)

Also:Fearful of awakening market bears, Yellen and Draghi to tread softly at Jackson Hole (http://www.marketwatch.com/story/fearful-of-awakening-market-bears-yellen-and-draghi-to-tread-softly-at-jackson-hole-2017-08-24)

Stock movers: Shares of Provident Financial PLC (PFG.LN) rallied 22%, adding to double-digit percentage gains from Thursday and Wednesday. On Friday, the company said it re-appointed Chris Gillespie (http://www.marketwatch.com/story/provident-financial-brings-chris-gillespie-back-2017-08-25) as managing director of its consumer credit unit. The U.K.-based lender tumbled 66% on Tuesday (http://www.marketwatch.com/story/provident-warns-on-profit-again-ceo-to-leave-2017-08-22) after warning it will lose between 80 million pounds ($102 million) and GBP120 million in the third quarter.

Supermarket shares declined after Amazon.com Inc. (AMZN) said it would cut prices at Whole Foods Market Inc. (WFM) when the acquisition is complete. The move is seen as escalating the price war among grocery stores, which has already taken a toll on the sector. Shares of Royal Ahold Delhaize NV (AD.AE) slumped 6.3% and Tesco PLC (TSCO.LN) (TSCO.LN) gave up 1.7%.

Shares of Aviva PLC (AV.LN) swung lower, closing down by 0.3%. The insurer had said it is selling its 50% stake in its Italian joint venture to its partner Banco BPM SpA (BAMI.MI) for an undisclosed sum.

Energy stocks finished modestly higher, tracking gains for oil prices . Energy investors were closely watching Hurricane Harvey in the Gulf of Mexico, which was heading for Texas and the state's many oil refineries.

Read:Why Gulf of Mexico's Hurricane Harvey is bearish for oil (http://www.marketwatch.com/story/why-gulf-of-mexico-storm-harvey-is-bearish-for-oil-2017-08-24)

Shares of Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) tacked on 0.5%, and BP (BP.LN) (BP.LN) added 0.5%.

Economic data: The euro had been lower early Friday after the German Ifo business climate index slipped to 115.9 in August (http://www.marketwatch.com/story/german-ifo-business-sentiment-index-eases-2017-08-25) from 116 in July. Analysts had expected a reading of 115.7 for August, according to a FactSet forecast.

Separately, the final reading on German gross domestic product Friday confirmed the economy grew 2.1% in the second quarter.

Consumer confidence in France, the eurozone's second largest economy, fell to 103 (http://www.marketwatch.com/story/french-consumer-confidence-drops-in-august-2017-08-25) from 104 in July, statistics agency Insee said, in line with economists' forecasts.

Indexes: Germany's DAX 30 index flipped down to close 0.1% lower at 12,167.94. France's CAC 30 index shed 0.2% to 5,104.33, while the U.K.'s FTSE 100 index lost 0.1% to end at 7,401.46.

(END) Dow Jones Newswires

August 25, 2017 12:19 ET (16:19 GMT)