European markets steadied Thursday following sharp gains in the
previous session, with investors adopting a wait-and-see approach
ahead of key policy announcements from the European Central Bank
and the Bank of England.
In early trade the Stoxx Europe 600 was 0.2% lower. Major
indexes in France and Germany waned around 0.3%, having recorded
solid gains in the previous session on hopes that a long-awaited
cease-fire agreement might be materializing between Ukraine and
Russia. The FTSE 100 index in the U.K. bucked the trend, climbing
0.2%.
On Thursday, however, attention shifted away from geopolitics
and toward monetary policy, with forecasters split on whether ECB
President Mario Draghi will announce further measures--even
quantitative easing--to stimulate Europe's sluggish economic
recovery, or delay any action to assess the full impact of measures
announced in June.
"We don't expect the ECB to announce a broad-based asset
purchase program at today's meeting," currency strategists at BNP
Paribas write in a note. They do add, however, that they expect the
ECB to lower its key refinancing and deposit rates by another 0.1
percentage point.
"The ECB may also provide some more details of plans for
asset-backed security purchases, which would also help limit the
extent to which the central bank is viewed as falling short of
expectations," they write.
Barclays economists also say that it is probably too early for
the ECB to announce new policy measures, saying that the central
bank will likely also want to wait until the targeted long-term
refinancing operation (TLTRO) is deployed.
The Bank of England, meanwhile, is also seen leaving key
interest rates on hold at 0.5% even though two policy makers pushed
for an immediate rise to 0.75% in August, minutes last month
showed.
That marked the first time anyone on the Monetary Policy
Committee had voted for higher interest rates since July 2011.
Citigroup strategists, however, said that Thursday's meeting
would likely be a "nonevent."
Currency markets were little changed in early trade too, with
the euro marginally lower against the U.S. dollar at $1.314.
Sterling was also slightly weaker against the greenback at
$1.645.
Having climbed by more than 1% Wednesday, Russia's ruble was
0.1% higher against the dollar at 0.1%. Moscow's Micex was down
0.3% while the dollar-traded RTS index edged 0.2% lower having
closed the previous session up more than 3% and more than 5%
respectively.
In commodities, Brent crude was down 0.6% on the day at $102.17
a barrel. Gold gained 0.1% to $1,271.80 a troy ounce.
Back in equity markets, Standard Life PLC was the biggest gainer
of the day on the pan-European index, with shares surging more than
9% following news that Canada's Manulife Financial Corp., the
country's biggest life insurer, has agreed to acquire the Canadian
operations of the U.K. firm for about 4 billion Canadian dollars
($3.67 billion).
German construction and services firm Bilfinger SE is the
biggest loser, with shares falling more than 9% after the company
issued its third profit warning in as many months.
Write to Josie Cox at josie.cox@wsj.com
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