Europe ends in the red as investors digest central banking news; utilities lag

  • The pan-European Stoxx 600 closed provisionally down 0.46 percent, with the majority of Europe's industries finishing lower
  • The Bank of England and European Central Bank both held fire on changing their interest rate strategy Thursday

European stocks finished Thursday's trading day in negative territory.

The pan-European STOXX 600 closed provisionally down 0.46 percent, with the majority of Europe's industries finishing lower. Basic resources outperformed, however, closing up 0.68 percent.

Looking to bourses, the U.K.'s FTSE 100 slipped 0.65 percent, while France's CAC 40 dropped 0.78 percent and Germany's DAX fell 0.44 percent. Athens' exchange, however, rose more than 2 percent, while the country's 10-year government bond yield touched its lowest in almost 10 years, Reuters reported.

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Utilities was the worst performing sector Thursday, closing down 1.29 percent, with most of its stocks closing in the red. Industrials also came under pressure, amid worse-than-anticipated company forecasts for 2018.

Capita announced that it was on course to reach its full-year profit target yet warned some upcoming work was unlikely to provide an immediate boost. The outsourcer also cited challenging market conditions as it struggled to secure major contracts. Shares consequently slumped 12.6 percent.

Meanwhile, Steinhoff tumbled to the bottom of the European benchmark after the South African retailer said it would have to restate its 2016 financial results. Shares tanked over 13 percent.

Looking at stocks, shares of Denmark's wind power firm Vestas popped 7.06 percent after reports of a positive compromise between the two chambers of Congress regarding a U.S. tax overhaul. Vestas, which has a large exposure to the U.S. market, has previously criticized the tax bill for cutting support to the wind turbine market. Fellow renewable energy firm Siemens Gamesa rose on the back of this, closing up 3.5 percent.

Central banks

Amid the slew of central bank decisions, on Thursday the European Central Bank (ECB) kept its monetary policy unchanged — a move that was widely expected. Its Governing Council said that the ECB expects to keep rates at present levels for "an extended period of time".

During the central bank's press conference, President Mario Draghi announced that the ECB had raised its projections on both inflation and growth, news that initially caused the euro to edge higher, before it fell against the U.S. dollar in later trade. Draghi added that if the economic outlook becomes "less favorable", or there's inconsistency in financial conditions, the ECB is prepared to increase its asset purchase program — in duration and/or in size.

Switching to the U.K., the Bank of England's (BOE) Monetary Policy Committee voted 9-0 to keep its monetary policy unchanged, leaving the nation's interest rate at 0.5 percent — a move which was widely expected by markets.

In the States, the Federal Reserve hiked interest rates for a third time this year on Wednesday. The U.S. central bank delivered its much-anticipated rate decision with a word of caution over low inflation — which is expected to remain below the Fed's target for another year.

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In other news, British lawmakers voted in favor of an amendment to the European Union Withdrawal Bill on Wednesday, giving parliament more say over any final exit deal. On Thursday, however, Prime Minister Theresa May told reporters she was on course to deliver Brexit and a new partnership with the EU.

In the U.S., Walt Disney announced Thursday that it had acquired many assets of Twenty-First Century Fox — in a deal worth more than $52 billion in stock. Wall Street traded slightly higher around Europe's close on Thursday, boosted by the M&A activity in the media sector. London-listed broadcaster Sky ended almost 2 percent down.