Europe Markets

Europe markets close mixed as ECB strikes a dovish tone

Key Points
  • The pan-European Stoxx 600 dipped just below the flatline, with sectors and major bourses in mixed territory.
  • The ECB announced that it would delay its first post-crisis interest rate hike until at least the middle of next year.
  • President Trump told reporters Thursday that tariffs on China could be raised by another $300 billion if necessary.

European stocks closed mixed Thursday as the European Central Bank revised its forward guidance in its latest policy decision.

The pan-European Stoxx 600 closed provisionally just below the flatline, with sectors and major bourses in mixed territory.

The ECB announced that it would delay its first post-crisis interest rate hike until at least the middle of next year, while announcing generous terms on a new batch of long-term loans for banks.

In a statement, the ECB said it would hold its key policy rate at the current -0.4% and continue to reinvest in maturing bonds in its 2.6 trillion euro ($2.9 trillion) debt portfolio. The central bank also announced it will pay lenders an interest rate of up to 0.3% to borrow. The euro rose to a day's high on the news.

"The prolonged presence of uncertainties related to geopolitical factors, the rising threat of protectionism and vulnerabilities in emerging markets is leaving its mark on economic sentiment," ECB President Mario Draghi said, as he addressed reporters during a news conference in Vilnius, Lithuania.

"Looking ahead, the governing council is determined to act in case of adverse contingencies."

Central banking continues to shake up sentiment overseas, with the U.S. Federal Reserve being front and center.

On Wednesday, stocks on Wall Street ended the session on a high, as investors grew even more hopeful on the prospect that the Fed would cut interest rates during the course of 2019, as trade conflicts mount.

Turning to Thursday's session, U.S. stocks added to those gains, with the Dow Jones Industrial Average up 100 points by the closing of European trade, and and Nasdaq Composite indexes also higher.

Elsewhere, trade turmoil shows no signs of diminishing any time soon. After a meeting between the U.S. and Mexico, talks failed to secure a deal on immigration or the state of tariffs, however, discussions are expected to resume.

President Donald Trump took to Twitter, to state that while progress was being made, it was "not nearly enough." The U.S. president went on to say that if no agreement was secured, then tariffs would begin on Monday. GOP senators have however, recently indicated that they do not agree with the 5% levy on all Mexican imports.

Trump then told reporters at the Irish airport of Shannon Thursday that tariffs on China could be raised by another $300 billion if necessary. The president is on his way to France for a D-Day commemoration.

Aside from the all-important ECB decision, gross domestic product (GDP) growth for the euro area was confirmed at 0.4% quarter-on-quarter and 1.2% year-on-year.

In terms of individual stocks, Commerzbank shares initially rose in afternoon trade after reports Germany is in talks with the Netherlands over a possible merger with Dutch bank ING. But the stock has since declined 1%, while ING was down 0.6%.

Renault shares were down around 7% after Fiat Chrysler abandoned a $35 billion merger offer for the French carmaker.

On the other end, British tobacco firm Imperial Brands sat at the top of the Stoxx 600 with an almost 6% gain, closely followed by Danish bioscience company CHR Hansen, which climbed 5%.