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European markets close lower, banks rally; euro jumps; HSBC hits 4-year-high

  • Europe investors digest major buyback plans from some of the U.S.' biggest banks
  • Euro jumps to one-year high
  • Sky shares up by nearly 4%

European bourses closed lower Thursday on expectations of tighter monetary policy across the globe, while investors digested major share buyback plans from some of the U.S.' biggest banks.

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The pan-European Stoxx 600 was down by 1.34 percent, with the majority of sectors in the red. The euro continued to rise, trading at $1.1429 after the greenback dipped in U.S. trade as investors sensed that tightening monetary policy could soon extend beyond the U.S. to Europe and Canada.

Basic resources was among the the top performing sectors, after banks, up 0.3 percent. Rio Tinto moved up 2.4 percent on the European benchmark after shareholders agreed a $2.69 billion coal assets sale to China-backed Yancoal.

HSBC, however, was in the top 2 of the European benchmark after Morgan Stanley raised its rating to 'overweight' from 'equal-weight', saying Brexit fears were overplayed and forecasting a capital surplus. The stock hit a 4-year high.

The stock was additionally buoyed by a wider rally in banking stocks after the Federal Reserve agreed to give the 34 largest U.S. banks the green light for buyback plans. However, comments from central bank officials in the U.K. and Europe have raised the prospects of a tightening of monetary stimulus in the coming months, which reduced some of the earlier gains.

Furthermore, shares of DS Smith rose 8 percent hitting the top of the European benchmark after reports that its buying 80 percent of Interstate Resources.

Meanwhile, U.S. markets were mostly higher after the Federal Reserve cleared capital returns programs for the big banks.

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Sky moves nearly 4% up

Meanwhile, media stocks were also lower. The U.K. regulator OFCOM announced on Thursday that 21st Century Fox's proposed acquisition bid for Sky "unambiguously" raised public interest concerns as it would give the Murdoch Family Trust a "unique" media presence.

However, Sky rose 3.2 percent indicating that traders believe the perceived chances of the deal now succeeding had in fact substantially improved.

Household goods, retail and food and beverages stocks were among the biggest fallers on Thursday as data showed net unsecured consumer credit increasing by £1.7 billion ($2.21 billion) over the month, the highest amount since last November.

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