Forexpros – European stocks were lower on Thursday, as market sentiment waned after the Federal Reserve held back from implementing further monetary easing, while downbeat German manufacturing data added to euro zone debt concerns.
During European morning trade, the EURO STOXX 50 dropped 0.61%, France’s CAC 40 declined 0.58%, while Germany’s DAX 30 retreated 0.72%.
The Fed announced that it is extending the current bond-buying program, known as “Operation Twist”, until the end of the year and said that it was ready to take additional steps. Fed officials also lowered their estimates for economic growth.
Meanwhile, preliminary data showed that an index of manufacturing activity in Germany declined more-than-expected in June, falling to 44.7 from a reading of 45.2 the previous month, adding to concerns over the effects of the euro zone crisis on the region’s largest economy.
The index of service sector activity in Germany also declined more-than-expected in June.
A separate preliminary report showed that manufacturing activity in the euro zone declined more-than-expected, while service sector activity improved unexpectedly in June.
Financial stocks were broadly lower, as shares in French lenders BNP Paribas and Societe Generale tumbled 1.38% and 1.95%, while Germany’s Deutsche Bank and Commerzbank declined 1.14% and 0.28% respectively.
Spain’s largest phone company Telefonica saw shares plunge 1.57% after Moody’s Investor Service cut its credit rating by one notch to Baa2. Moody’s said the company’s credit rating could be reduced further as Spanish consumers are currently scaling back spending and as the government’s credit profile worsens.
Cyclical stocks were also on the downside, weighed by disappointing manufacturing activity data from China, showing a contraction for the eighth straight month. France-based steel company ArcelorMittal saw shares plunge 3.37%, while energy companies broadly weakened, led by Spain’s Repsol, down 5.61%.
In London, commodity-heavy FTSE 100 dropped 0.59%, weighed by sharp losses mining and energy stocks.
Copper producers led losses as shares in Kazakhmys and Xstrata dove 4.90% and 3.44% respectively, while mining giants Rio Tinto and Bhp Billiton tumbled 3.07% and 2.76%.
Oil and gas major Anglo American was also on the downside, plunging 2.75%, while BP saw shares drop 2.31%.
U.K. lenders added to losses, as shares in Lloyds Banking plunged 1.57% and the Royal Bank of Scotland retreated 1.62%, while Barclay and HSBC Holdings declined 1.17% and 1.09%.
Elsewhere, shares in British engineer Invensys sank 16.46% after saying that preliminary discussions about a takeover with third parties including Emerson Electric had ended with no offer.
In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a 0.42% decline, S&P 500 futures signaled a 0.50% drop, while the Nasdaq 100 futures indicated a 0.44% loss.
Also Thursday, markets were eyeing an audit of Spanish banks later in the day, amid concerns that the results could show that a EUR100 billion bailout for the country’s banks agreed earlier this month would not be large enough.
Later in the day, Spain was to hold an auction of government debt, while European Central Bank head Mario Draghi was to speak.
The U.S. was to produce government data on unemployment claims, followed by preliminary data on manufacturing activity and an industry report on existing home sales. The country was also to release data on manufacturing activity in the Philadelphia area.
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