Tags: Europe | stocks | Carney | Bank of England

European Stocks Decline With FTSE 100 After BOE's Carney Speech

Thursday, 25 September 2014 01:32 PM

European stocks fell to a four-week low, erasing earlier gains, as U.K. shares dropped after Bank of England Governor Mark Carney said the time to increase interest rates is getting closer.

The Stoxx Europe 600 Index lost 0.9 percent to 341.44 at the close, after earlier gaining as much as 0.5 percent. The U.K.’s FTSE 100 Index fell 1 percent as Carney said the judgment on when to increase the benchmark rate from a record low has become “more balanced” in recent months.

The BOE policy aligns with that of the Federal Reserve, which is stepping down its bond purchases and is projected to end them next month. Projections released Sept. 17 showed that most Fed officials expect interest rates to go up next year. The European Central Bank is taking the opposite path, announcing a plan to buy securitized debt and keeping rates low until inflation increases toward its target.

“Markets are torn between two different drivers,” Ralf Zimmermann, an equity analyst at Bankhaus Lampe KG in Dusseldorf, Germany, said in a phone interview. “On the one side, you have the sugar by the ECB, which could get sweeter. On the other side, this withdrawal of monetary stimulus by the Fed and the Bank of England, along with the prospect of interest rate hikes. Further down the road, we see this as more of a risk for markets as stock investors build their positions on expectations of ongoing growth without any rate hike threat.”

ECB Boost

The euro-area’s central bank lowered its three main interest rates on Sept. 4 and said it will start buying securitized debt. The central bank is unanimous on the use of unconventional monetary policy to revive growth in the euro area, President Mario Draghi told the region’s central bankers at a conference in Vilnius, Lithuania today.

In the U.S., reports showed first-time applications for jobless benefits rose last week by a less-than-estimated extent, while durable-goods orders slumped last month.

The volume of shares changing hands in Stoxx 600-listed companies was 35 percent greater than the 30-day average for this time of the day, according to data compiled by Bloomberg.

Greece’s ASE Index fell 1.63 percent for the biggest decline among 18 western-European national gauges. Portugal’s PSI 20 Index lost 1.3 percent. Germany’s DAX Index slid 1.6 percent, and France’s CAC 40 Index dropped 1.3 percent.

Miners Slump

A gauge of commodity producers on the Stoxx 600 posted the biggest decline among the 19 industry group on the Stoxx 600, falling 2 percent. The group is heading for the biggest monthly loss since June 2013.

BHP Billiton Plc and Rio Tinto Group, the world’s biggest mining companies, lost 2.9 percent to 1,746 pence and 2.4 percent to 3,105 pence, respectively.

Hennes & Mauritz AB fell 4.2 percent to 300.50 kronor. Europe’s second-biggest clothing retailer reported a decline in third-quarter profitability and warned that higher garment costs will weigh on margins the rest of the year.

Outokumpu Oyj gained 5 percent to 5.86 euros. The Finnish steelmaker said it expanded a cost-cutting program by as much as 250 million euros.

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European stocks fell to a four-week low, erasing earlier gains, as U.K. shares dropped after Bank of England Governor Mark Carney said the time to increase interest rates is getting closer.
Europe, stocks, Carney, Bank of England
Thursday, 25 September 2014 01:32 PM
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