Car makers resume rally, offsetting falls for bank shares
European stocks held broadly steady on Thursday, with gains for car makers offsetting losses for banks, as investors waited to find out whether the European Central Bank is ready to wind down its bond-buying program.
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The Stoxx Europe 600 index was trading basically flat around 374.01, as financial, industrial and telecom shares fell. But tech and consumer goods shares were among advancing sectors. On Wednesday, the index turned higher to close up 0.1% (http://www.marketwatch.com/story/european-stocks-head-for-3rd-straight-loss-as-irma-weighs-on-insurers-2017-09-06), snapping a two-day losing streak.
Bank stocks were losing ground ahead of the ECB monetary policy update due later. The focus is on whether the central bank will start tapering its EUR60-billion-a-month bond-buying program, or hold off for fear of denting the eurozone's economic recovery.
"Investors are convinced that the ECB will begin tapering QE, and it's all about the announcement date and size of the cuts," said Hussein Sayed, chief market strategist at FXTM.
"If the ECB decided to surprise and cut asset purchases by EUR10 billion - EUR20 billion euros starting January, the euro will likely revisit the 1.20 level and possibly break above August highs," he said.
"Postponing the decision will only have a short-term negative impact, and I believe this will create another opportunity to buy the dips towards 1.17-1.18 levels."
The ECB has signaled that it's concerned about the strength of the euro , which on Thursday was changing hands at $1.1950, up from $1.1917 late Wednesday in New York. But on Wednesday, Deutsche Bank AG's (DBK.XE) Chief Executive John Cryan urged the ECB to begin the process of winding down (http://www.marketwatch.com/story/deutsche-bank-ceo-urges-ecb-to-end-cheap-money-era-2017-09-06) its "cheap money" policy, regardless of the strength of the euro.
Read:Here's how the ECB got 'stuck in the euro trap' on its way to winding down QE (http://www.marketwatch.com/story/heres-how-the-ecb-got-stuck-in-the-euro-trapon-its-way-to-winding-down-qe-2017-09-05)
(http://www.marketwatch.com/story/heres-how-the-ecb-got-stuck-in-the-euro-trapon-its-way-to-winding-down-qe-2017-09-05)The ECB's rate decision annoucement is scheduled for 12:45 p.m. London time, or 7:45 a.m. Eastern Time, followed by a press conference with ECB President Mario Draghi at 1:30 p.m. London time.
Lenders down: Bank shares were falling on the widely held expectation that the ECB will leave its key interest rates unchanged. Higher interest rates could bolster net interest margin at banks.
The Stoxx Europe 600 Bank Index lost 0.7%. There, shares of Deutsche Bank AG (DBK.XE) was down 0.3%, Societe Generale SA (GLE.FR) dropped 0.5%, and Banco Santander SA (SAN) shed 0.1%.
Car makers revved: Auto maker stocks continued to push higher after Barclays and Goldman Sachs upgraded ratings in the sector on Wednesday.
Shares of Daimler AG (DAI.XE) rose 1.6%, BMW AG (BMW.XE) gained 1.5%, and Volkswagen AG (VOW.XE) (VOW.XE) picked up 0.8%. But Fiat Chrysler Automobiles NV (FCA.MI) (FCA.MI) shed 0.2%.
Stock movers: RWE AG (RWE.XE) and E.On SE (EONGY) climbed 3.1% and 2%, respectively, after Deutsche Bank raised price targets on those energy companies, according to Dow Jones Newswires.
Royal Bank of Scotland (RBS.LN) fell 1.1% as U.K. lawmakers called on the Financial Conduct Authority to publish its report on potential missteps by the bank's business restructuring unit.
Country indexes: Germany's DAX 30 index was the best performing in Europe, rising 0.5% to 12,280.33, aided by gains for the auto makers, RWE and E.On. (http://www.marketwatch.com/story/heres-how-the-ecb-got-stuck-in-the-euro-trapon-its-way-to-winding-down-qe-2017-09-05)
France's CAC 40 index picked up 0.1% to 5,109. In London, the FTSE 100 was fractionally higher at 7,354.55.
(END) Dow Jones Newswires
September 07, 2017 04:42 ET (08:42 GMT)