Pre-ECB jitters knock 1pc off European stocks

General view of the exterior of the European Central Bank (ECB) headquarters building in Frankfurt. — Reuters pic
General view of the exterior of the European Central Bank (ECB) headquarters building in Frankfurt. — Reuters pic

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BRUSSELS, Sept 8 — European stocks were on course for their biggest decline in three weeks today, a day ahead of a European Central Bank meeting that will see policymakers debate a cut in its stimulus.

The Europe-focussed STOXX 600 index fell 1.3 per cent, tracking overnight losses on Wall Street’s benchmark S&P 500 and Asian stocks on worries about the slowing pace of a global economic recovery.

Economy-sensitive financial services, auto, oil & gas, and banking stocks were the biggest decliners, down between 1.6 per cent and 1.8 per cent, while travel stocks fell the least.

“It’s only a month ago that stocks were at all-time highs, and with an ECB meeting tomorrow, people will be unwilling to buy because it can be a bit of a risky trade,” said David Madden, market analyst at Equiti Capital in London.

“It’s more of what happened in the US last night and just a bit of position squaring ahead of ECB.”

Austria’s central bank chief Robert Holzmann, considered as a hawkish member of the ECB, said the central bank could tighten policy sooner than many expect as inflationary pressures could prove to be persistent.

The central bank is expected to announce a reduction in bond buying on Thursday, with analysts polled by Reuters forecasting purchases under the Pandemic Emergency Purchase Programme (PEPP) falling possibly as low as €60 billion (RM294 billion) a month from the current €80 billion. However, doves are also expected to emphasize that other tools will be ramped up.

After hitting a record high in mid-August, the STOXX 600 has hovered below those levels as worries over central bank policies and signs of slowing global growth kept investors on the edge.

Brokerage actions also spurred losses in stocks, with Spanish turbine maker Siemens Gamesa down 6.3 per cent after JPMorgan downgraded the stock to a “neutral” rating. Danish peer Vestas also fell 3.6 per cent.

Swedish investment company EQT fell 4.8 per cent after a share placing deal, while Stellantis dropped 2.4 per cent as Dongfeng Motor Hong Kong said it had sold shares in the carmaker for about €600 million.

French drugmaker Sanofi slipped 1.9 per cent after it agreed to buy US biopharmaceutical company Kadmon Holdings Inc in a US$1.9 billion (RM7.9 billion) deal.

British industrial technology company Smiths Group rose 4.3 per cent after it agreed to sell its medical unit to US-based ICU Medical Inc for US$2.4 billion. — Reuters

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