European Markets Drop On U.S. Weakness

The European markets fluctuated between small gains and losses in early trade Thursday. However, the majority of the markets turned lower in the afternoon after the weak open on Wall Street.

The Bank of England’s rate-setting body decided to hold the record low interest rate steady on Thursday, again in a split vote as a policymaker sought a hike.

Although seven members of the Monetary Policy Committee voted to keep the rate unchanged at the May meeting, the bank signaled that the rates need to be raised somewhat by a greater extent than markets expect.

The MPC, governed by Mark Carney, voted 7-1 to maintain the bank rate at 0.25 percent. Kristin Forbes sought a 25 basis point rate increase for a second policy session in a row.

All other seven members said the current monetary policy setting remained appropriate to balance the demands of the MPC’s remit.

The committee also voted unanimously to maintain the asset purchase programme at GBP 435 billion.

The bank downgraded its 2017 growth outlook to 1.9 percent from 2 percent, citing weakening household spending. Growth for the second quarter was forecast at 0.4 percent.

Nonetheless, the bank lifted the growth projection for 2018 to 1.7 percent from 1.6 percent and that for 2019 to 1.8 percent from 1.7 percent.
Euro area economy is set to expand this year at a faster pace than previously expected though the main growth driver consumption is seen to slow amid rising inflation, the European Commission said Thursday.

In its Spring Forecast, the European Union executive raised the Eurozone growth forecast for this year to 1.7 percent from 1.6 percent. The prediction for 2018 was retained at 1.8 percent.

The growth projection for the EU was raised to 1.9 percent for both years from 1.8 percent.

The pan-European Stoxx Europe 600 index weakened by 0.54 percent. The Euro Stoxx 50 index of eurozone blue chip stocks decreased 0.62 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.41 percent.

The DAX of Germany dropped 0.36 percent and the CAC 40 of France fell 0.32 percent. The FTSE 100 of the U.K. gained 0.02 percent and the SMI of Switzerland finished lower by 0.27 percent.

In Frankfurt, Deutsche Post tumbled 3.69 percent. The postal and logistics company reported lower than expected first-quarter profit because of difficult price environment in its freight division.

In Paris, Credit Agricole lost 0.98 percent despite reporting a near fourfold increase in first-quarter profit.

In London, Barclays decreased 1.81 percent after chief executive Jes Staley apologized to shareholders for his behavior over the recent whistleblowing incident.

BT shares slumped 4.63 percent. The troubled telecoms giant has unveiled plans to cut 4,000 jobs worldwide in a major overhaul, after reporting a fall in fourth-quarter pretax profit.

Hikma Pharmaceuticals sank 7.77 percent after U.S. regulators delayed approval for a new drug.

UniCredit soared 3.67 percent in Milan as its Q1 net profit topped…

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