European stock markets mixed after ECB decision

GMT 14:54 2014 Thursday ,07 August

Arab Today, arab today European stock markets mixed after ECB decision

German stock brokers work at the DAX stock exchange
London - AFP

Europe's main stock markets were mixed on Thursday as traders weighed concerns about the impact of Russian sanctions against the West after the European Central Bank kept its key rate on hold.
In mid-afternoon trading, Frankfurt's main DAX 30 index gained 0.23 percent to 9,151.32 points while in Paris the CAC 40 index slid 0.42 percent to 4,189.42, compared with Wednesday's close.
London's benchmark FTSE 100 index added 0.11 percent to stand at 6,43.43 points after the Bank of England also chose to hold its key interest rate at a record low.
The European Central Bank held its key interest rates unchanged at 0.15 percent at its regular policy meeting on Thursday, two months after easing monetary conditions in the 18-country euro area.
In foreign exchange trading, the euro was broadly unchanged from late in New York on Wednesday at $1.3381.
Speaking after the decision, president Mario Draghi warned that the eurozone recovery "remains weak, fragile and uneven" and that recent data showed "there has a been a slowing down in the growth momentum".
Draghi also sought to allay concerns that the euro's strength is harming growth, adding that "the fundamentals for a weaker exchange rate are better than they were two or three months ago".
Markets had been shaken on Wednesday by news that Italy fell back into recession in the second quarter while factory orders in Germany, the bloc's powerhouse, cratered by 3.2 percent in June.
The news hit shares, adding to concerns a "full embargo" by Russia on most food imports from EU, US, and other Western countries which have imposed sanctions against Moscow over its policy on Ukraine could hurt the bloc's economy.
"The calm at the ECB is a reminder that the eurozone is on the right track despite some recent growth disappointments due to the Putin factor in Germany and a lack of reform in Italy and France," said Christian Schulz, an economist at Berenberg.
In London, the Bank of England also opted to keep its main interest rate at a record-low level of 0.50 percent against a backdrop of solid British economic growth.
- Wall Street opens higher -
US stocks opened higher on Thursday, buoyed by news of the ECB and BoE decisions and data showing that weekly jobless claims fell.
Five minutes into trade, the Dow Jones Industrial Average rose 0.35 percent to 16,500.88.
The broad-based S&P 500 advanced 0.42 percent to 1,928.23, while the tech-rich Nasdaq Composite Index gained 0.42 percent to 4,373.31.
The claims for the week to August 2, a sign of the pace of layoffs, fell to 289,000, the second reading below the 300,000 level in a month.
"So far US markets are brushing off Russian sanctions on food imports," said Jasper Lawler at CMC Markets.
Russia retaliated against tough new Western sanctions on Thursday, banning most food imports from the United States and the European Union and threatening to block flights over its airspace.
The tit-for-tat moves further heighten tensions between Russia and the West over the conflict in Ukraine, where heavy shelling was reported in the rebel-held eastern city of Donetsk.
The embargo will affect "imports of beef, pork, fruit and vegetable produce, poultry, fish, cheese, milk and dairy products from the European Union, United States, Australia, Canada and Norway," Russian Prime Minister Dmitry Medvedev told a government meeting.
EU producer groups warned that the embargo could lead to a glut of food in the European Union, as Russia buys some 10 percent of the EU's food exports.
In corporate news, shares in Nestle rose 3.5 percent after the world's largest food industry group posted a slump in earnings and sales for the first half of the year, blaming the strong Swiss franc.
The euro rose to 79.48 pence from 79.41 pence on Wednesday. The pound slipped to $1.6835 from $1.6851.
On the London Bullion Market, the price of gold fell to $1,302 an ounce from $1,306.50.

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