Europe Markets

Europe shares end mixed after dovish BoE; Adecco tanks 10%

Europe shares end mixed after dovish BoE
Europe shares end mixed after dovish BoE

European equities finished mixed on Thursday as investors reacted to a stronger dollar, a fresh round of corporate earnings and a rate decision by the Bank of England.

BoE dovish

European markets

The pan-European STOXX Europe 600 index pared gains to end around 0.4 percent lower with major bourses pointing in different directions.

London's FTSE index closed lower, provisionally ending 0.75 percent lower, while the German DAX and the French CAC closed around 0.7 percent and 0.4 percent higher respectively, down from earlier gains.

At midday, the Bank of England's monetary policy committee decided to keep rates on hold with only one member of the 9-member committee dissenting and voting for a rate hike. Sterling fell to a one-week low of $1.5269 against the dollar after the decision. The BoE appears to be in no hurry to increase rates with the U.K. in deflation territory.

U.K. interest rates are now likely to remain lower for even longer, with the middle of 2017 a real prospect for what would be the first rise in close to a decade.

Hawkish Yellen

In the U.S., however, investors were cautious after Fed Chair Janet Yellen said Wednesday that a December rate hike is a "live possibility," depending on the data. Testifying before the House Financial Services Committee yesterday, Yellen said she and the committee expect the economy to grow "at a pace that's sufficient to generate further improvement in the labor market, and to return inflation to our 2 percent target."

The dollar gained after Yellen's statement, trading around $1.08 against the euro on Thursday, weighing on commodity prices. Consequently, the basic resources sector in Europe closed down over 3 percent.

SocGen soars, Adecco tanks 10%

On the earnings front, French bank Societe Generale saw a sharp increase in its retail banking business as it recorded a 27 percent increase in third-quarter group net profit to 1.126 billion euros ($1.2 billion). Shares of the bank rallied to close over 4 percent higher.

Elsewhere, Adecco reported a third-quarter net loss of 513 million euros, versus expectations from analysts polled by Reuters for a 223 million euros profit. Adecco shares tanked over 10 percent after the earnings report.

Credit Agricole shares ended around 8 percent lower Thursday after the French bank reported third quarter earnings which showed a 14.8 percent rise in net profit to 930 million euros, in line with expectations.

Oil in focus

Oil prices were also in focus, regaining some ground after sharp losses on Wednesday after weekly U.S. crude inventories rose for a sixth straight week. U.S. Crude traded flat at around $46.26 a barrel. Brent crude also fluctuated around $48.45 a barrel, after dropping 3.9 percent on Wednesday.

In other news, evidence now suggests that a bomb planted by the Islamic State militant group is the likely cause of last weekend's crash of a Russian airliner over Egypt's Sinai peninsula, U.S. and European security sources said on Wednesday, Reuters reported.

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