QATAR: European equities fell after the ECB and Bank of England kept interest rates on hold …

logo of the European currency stands in front of the headquarters of the European Central Bank (ECB) in Frankfurt am Main.

European equities fell yesterday after the ECB and Bank of England kept interest rates on hold and held off providing more monetary stimulus to the fragile economic recovery, dealers said.
London’s FTSE 100 index of top companies shed 1.3% to finish at 6,336.11 points, Frankfurt’s Dax 30 index lost 1.19% to 8,098.81 points, while in Paris the Cac 40 dropped 0.99% to end at 3,814.28 points.
The European Central Bank yesterday kept its key refinancing rate unchanged at an all-time low of 0.5% in a widely anticipated move, after cutting rates by a quarter of a percentage point last month.
“Stocks in Europe have slipped Thursday afternoon, losing composure after ECB chief Mario Draghi says at the monthly press conference that negative deposit rate being on the shelf and the central bank is technically ready for them,” ETX Capital trader Ishaq Siddiqi said.
A negative deposit rate at the ECB would encourage banks to put funds to use and speculation has been mounting the central bank could resort to such an unconventional measure rather than quantitative easing.
The Bank of England also as expected kept its main interest rate at 0.5%, where it has stood for more than four years.
It also chose not to undertake any additional quantitative easing to support the fragile recovery of the British economy. Under the measure central banks create cash to buy assets, freeing up bank funds to lend and hopefully stimulate the economy.
While little prospect of further support for the economy from the ECB hurt stock prices, it boosted the euro, which climbed to $1.3247 from $1.3089 late in New York on Wednesday.
The dollar slid to ¥97.82 from ¥99.16 a day earlier.
In trading on the London Bullion Market, the price of gold shrank to $1,400 an ounce yesterday, from $1,404 on Wednesday.
In midday deals, US stocks also traded lower as a modest fall in jobless claims — by 11,000 to 346,000 in the week ending June 1 — failed to dispel worries that the May job creation and unemployment numbers to be released Friday will prove a disappointment.
The vital US non-farm payrolls (NFP) data lends hints on the health of the world’s biggest economy.
The Dow Jones Industrial Average was down 0.29% at 14,916.82 points, while the broad-based S&P 500 fell 0.14% at 1,606.57 and the tech-rich Nasdaq Composite shed 0.12% to 3,397.36.
“Traders may be tempted to sit on their hands in the short term with the NFP due for release tomorrow,” said Mike McCudden, head of derivatives at stockbroker Interactive Investor.

Reported by: Caye Global News, Gulf Times/AFP


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