EUROPE MARKETS: European Stocks Rise As ECB Holds Policy Steady, But Hints Toward October Update
Eurozone growth stronger than previous estimated
European stocks rose Thursday as eurozone economic growth figures were raised and the European Central Bank offered few surprises in leaving monetary policy intact.
The Stoxx Europe 600 index rose 0.3% to close at 374.95, little changed after the conclusion of ECB President Mario Draghi's news conference in Frankfurt. Only the financial sector finished in the red. On Wednesday, the index closed 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.
In Frankfurt, the DAX 30 index climbed 0.7% to 12,296.63, and in Paris, the CAC 40 index gained 0.3% to 5,114.62. In London, the FTSE 100 rose 0.6% to 7,396.98.
The ECB said it would continue its asset-purchase program at EUR60 billion a month through the end of 2017, or beyond, and that stimulus measures could be ramped up if the outlook deteriorates.
"Information on timelines and conditions of tapering will come later in October. A cautious approach from the ECB is probably warranted," said Antoine Lesné, head of research for SPDR ETFs at State Street, in a note.
"Meanwhile, low inflation and a strong euro against the backdrop of stronger economic growth and improving consumer confidence still provide a positive environment for risk assets," said Lesné.
The euro has jumped 14% against the dollar so far this year.
Bank shares fell to intraday lows as the ECB left interest rates unchanged. Higher interest rates can bolster net interest margin for lenders. The Stoxx Europe 600 Bank Index fell 0.8%. Within it, shares of Deutsche Bank AG (DBK.XE)(DBK.XE) closed down 1.2%, Société Générale SA (GLE.FR) fell 0.6% and Banco Santander SA (SAN) (SAN) fell 0.4%.
Read: Why the time is right to pick up European bank shares, according to Barclays (http://www.marketwatch.com/story/why-the-time-is-right-to-pick-up-european-bank-shares-according-to-barclays-2017-09-06)
Bank stocks earlier in the session either pared losses or turned higher after Eurostat said the eurozone economy was 2.3% larger in the three months to June than it was in the year-ago period (http://www.marketwatch.com/story/eurozone-economic-growth-stronger-than-seen-2017-09-07). That would be fastest rate of growth recorded since the first three months of 2011.
Read:ECB live blog recap: Draghi points to October decision on QE taper (http://blogs.marketwatch.com/thetell/2017/09/07/ecb-live-blog-is-a-strong-euro-making-mario-draghi-miserable/)
Eur(o) phoric: The euro strengthened after the brighter economic growth figures and held above $1.20 after Draghi's remarks. The euro bought $1.2024 around the time of the European market close and hit an intraday high at $1.2059. The shared currency late Wednesday bought $1.1917.
ECB had previously signaled that it is concerned about the strength of euro. Draghi was asked Thursday about when a rise in the euro exchange rate would become a problem, but the central bank boss declined to comment.
"With the dollar under pressure as American jobs growth stalls and the U.S. faces up to its second hurricane in as many weeks, the euro was always likely to strengthen against the greenback today," wrote David Lamb, head of dealing at Fexco Corporate Payments.
"But the eurozone's robust growth--and Mr. Draghi's coded admission that QE could be reined in after the ECB's October meeting--turned a rise into a rout. $1.20 was once seen as a symbolic barrier for the euro, but on this evidence it could easily become the new normal," he wrote.
(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 yield on Germany's 10-year government bund fell 4 basis points to 0.304%, according to Tradeweb. Yields fall when prices decline.
Car makers revved: auto-maker stocks continued to rally after Barclays and Goldman Sachs upgraded ratings in the sector on Wednesday.
Shares of Daimler AG (DAI.XE) rose 0.8%, BMW AG (BMW.XE) gained 1.1%, and Volkswagen AG (VOW.XE) (VOW.XE) picked up 0.3%. Fiat Chrysler Automobiles NV (FCA.MI) (FCA.MI), however, returned to the red and fell 1.1%.
Stock movers: RWE AG (RWE.XE) and E. ON SE (EONGY) climbed 3.8% and 1.9%, respectively, after Deutsche Bank raised price targets on those energy companies, according to Dow Jones Newswires.
Royal Bank of Scotland (RBS.LN) (RBS.LN) fell 1.4% as U.K. lawmakers called on the Financial Conduct Authority to publish its report on potential missteps by the bank's business restructuring unit.
(END) Dow Jones Newswires
September 07, 2017 12:26 ET (16:26 GMT)