EUROPE MARKETS: European Stocks End Lower Before ECB; Gucci Parent Helps Lift Luxury Stocks

By Carla Mozee and Victor Reklaitis, MarketWatch Features Dow Jones Newswires

U.K. GDP expands more than anticipated

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European stocks ended with losses Wednesday as investors sold holdings ahead of a much-anticipated European Central Bank decision on monetary policy.

The ECB is slated to release its decision Thursday, and it may reduce its massive asset-purchase program. Investors also juggled a fresh round of corporate financial updates, including earnings from Gucci parent Kering SA and brewer Heineken Holding NV.

What stock indexes are doing

The Stoxx Europe 600 index fell 0.6% to close at 387.13, extending Tuesday's drop of 0.4%. (http://www.marketwatch.com/story/european-stocks-wobble-in-muted-action-but-earnings-provide-some-uplift-2017-10-24)

In London, the FTSE 100 tumbled 1.1% to end at 7,447.21, with the drop deepening after a better-than expected preliminary reading on third-quarter U.K. gross domestic product propelled the pound higher.

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Germany's DAX 30 index slipped 0.5% to finish at 12,953.41, while France's CAC 40 lost 0.4% to close at 5,374.89.

What strategists are saying

"Eurozone stock markets are selling-off ahead of the European Central Bank (ECB) meeting tomorrow. The ECB is currently buying EUR60 billion per month, and traders are expecting the central bank to talk about reducing the monthly purchase rate," said David Madden, a CMC Markets UK analyst, in a note.

What's driving markets?

Shares in some luxury companies pushed higher after Kering SA said its Gucci and Yves Saint Laurent brands helped pushed up quarterly sales.

But the main indexes slumped ahead of this week's main event in European financial markets: Thursday's ECB policy decision.

ECB President Mario Draghi and his colleagues are widely expected to say they will start tapering the central bank's bond purchases. But questions remain as to the size of the reduction in monthly purchases.

See:Mario Draghi needs to avoid a 'taper tantrum' when the ECB meets (http://www.marketwatch.com/story/mario-draghi-needs-to-avoid-a-taper-tantrum-when-the-ecb-meets-2017-10-23)

And read: Why Italy faces worst shock in Europe as ECB prepares to taper bond buys (http://www.marketwatch.com/story/why-italy-faces-worst-shock-in-europe-as-ecb-prepares-to-taper-bond-buys-2017-10-24)

The U.K.'s central bank is in focus, too, after a data release showed the British economy doing better than forecast. Thursday's preliminary reading on third-quarter GDP (http://www.marketwatch.com/story/uk-gdp-picks-up-pace-as-boe-gets-set-to-meet-2017-10-25) beat expectations. Growth was at 0.4% over the previous three months, against a FactSet forecast for 0.3%.

The data is expected to be assessed by Bank of England policy makers when they on Nov. 2.

The pound rose to $1.3260 after the GDP report, up from $1.3133 late Tuesday in New York. The euro traded at $1.1809, up from $1.1761.

Stock movers

Kering shares (KER.FR) rallied 8.8% after the company said third-quarter sales climbed 23%, in part as its Gucci label logged a 42.8% jump in revenue.

Shares of other luxury goods companies rose alongside Kering, with Christian Dior SE (CDI.FR) and LVMH Moet Hennessy Louis Vuitton SE both higher by 1.3%.

Heineken (HEIO.AE) fell 3.1% as the world's second-largest brewer said net profit rose 20% (http://www.marketwatch.com/story/heineken-net-profit-rises-20-backs-2017-guidance-2017-10-25) during the first nine months of the year, but also said its full-year expectations remain unchanged.

Shares in Telenor ASA (TEL.OS) leapt 4.9% as the Norwegian telecom company swung to a better-than-expected third-quarter net profit (http://www.marketwatch.com/story/telenor-backs-view-after-accelerating-cost-cuts-2017-10-25) and backed its full-year guidance.

Economic data

German business sentiment surged to a record high in October (http://www.marketwatch.com/story/german-business-sentiment-hits-record-high-ifo-2017-10-25). The Ifo think tank's business climate index climbed to 116.7 points, from 115.3 points in September.

(END) Dow Jones Newswires

October 25, 2017 12:37 ET (16:37 GMT)