Europe Economy

European Shares Close Lower After Draghi Comments


European shares closed sharply lower on Thursday after comments made by the Mario Draghi, president of the European Central Bank (ECB), curbed investor sentiment.

The pan-European FTSEurofirst 300 Index closed provisionally down 1 percent at 1,181.88 points after Draghi told a press conference the ECB cannot compensate for the lack of capital in Europe's banking system or for any lack of action by governments. Monetary policy would remain accommodative, he added.

The euro fell sharply against the dollar - before recovering - with most key European indexes following suit.

The ECB kept its benchmark interest rate unchanged at 0.75 percent. A Reuters poll of 73 economists had expected the rate to remain at 0.75 percent, despite record euro zone unemployment of 12 percent.

In the U.K, the Bank of England announced it would not add to its 375 billion pound ($566.7 billion) quantitative easing program and left the country's benchmark rate unchanged at 0.5 percent. The FTSE 100 closed provisionally down 1 percent.

In other European news, Cyprus will extend capital controls for one more week, a central bank official said Wednesday according to a report by Dow Jones, and the country's former finance minister called the country's near-term outlook "very unfavorable."

European shares were also pressured downwards by weak jobs numbers from the U.S. Weekly jobless claims popped 28,000 last week to a seasonally adjusted 385,000, , according to the Labor Department. It was the third straight week of gains in claims. Economists polled by Reuters had expected first-time applications last week to fall to 350,000.

In other economic data, purchasing managers' index (PMI) data for Spain's services sector showed a contraction for the 21st month in a row. The figure for March showed a slight uptick to 45.3 against 44.7 in February.

Correction: An earlier version of this article reported that the ECB rate decision was at 11.45 p.m. London time, when the decision is actually at 12.45 p.m. London time.