Europe Markets

European stocks close lower as markets react to central bank announcements, Grenke up 33%

Key Points
  • The Bank of England on Thursday left interest rates unchanged and maintained its current level of asset purchases.
  • But it warned that the outlook for the economy remains "unusually uncertain."

European stocks retreated Thursday as investors around the world reacted to a host of central bank meetings in recent days.

The pan-European Stoxx 600 dropped 0.4% by the close, banks falling 1.5% to lead losses as almost all sectors and major bourses slid into the red.

European markets started the day following their counterparts in Asia and the U.S. lower as traders digested the Federal Reserve's pledge to keep rates low over the next few years.

Members of the Federal Open Market Committee indicated the U.S. overnight rate could stay anchored to the zero-bound through 2023 as the central bank tries to spur inflation. In a statement, the committee said: "With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time."

Normally, the prospects of lower rates for a prolonged time period spur buying in equities. However, that was not the case on Wednesday and Thursday. On Wall Street as European markets closed, the major averages nudged slightly higher after a lower open.

BOE decision

The Bank of England on Thursday left interest rates unchanged and maintained its current level of asset purchases, but warned that the outlook for the economy remains "unusually uncertain."

The Bank also revealed that the Monetary Policy Committee had been briefed on plans to explore how a negative bank rate could be implemented effectively, meaning the BOE is now openly considering how to use negative interest rates.

Meanwhile in Asia, the Bank of Japan kept monetary policy steady on Thursday. In its monetary policy statement, the BOJ said the Japanese economy has started to pick up but remained in "a severe situation" due to the impact of the coronavirus pandemic at home and abroad.

In terms of individual share price action, Grenke rallied 33% to lead the Stoxx 600, rebounding from a heavy week of losses after issuing a firm denial of fraud allegations by short-seller Viceroy Research. Grenke also revealed it is considering legal action against Viceroy.

IG Group shares jumped more than 6% after the online trading platform recorded a spike in revenues for the first quarter of fiscal year 2021.

At the other end of the European blue-chip index, mall operator URW fell 10% after a 3.5 billion euro ($4.1 billion) rights issue.

- CNBC's Eustance Huang and Fred Imbert contributed reporting to this story.