By Carla Mozee, MarketWatch Euro climbs; ruble extends slide vs.
dollar
LONDON (MarketWatch) -- European stocks turned sharply lower
while the euro climbed Thursday, after European Central Bank chief
Mario Draghi dashed hopes for a quantitative-easing launch this
month by saying the bank won't consider it until early next
year.
The Stoxx Europe 600 dropped 1.3% to 344.94. At a press
conference, Draghi said the ECB's Governing Council is preparing
for the possibility of easing measures in early 2015, but added
that time frame doesn't necessarily mean around the bank's meeting
in January. Read live blog of Draghi's press conference.
Ahead of Thursday's meeting, there was speculation Draghi would
announce the launch of sovereign-bond purchases, or at least
indicate it would consider introducing such action early in 2015.
In recent weeks, a string of weak economic data has turned up the
pressure on ECB policy makers to act to bolster inflation and
encourage growth in the eurozone.
"Just 20 minutes into the press conference, Draghi has deflated
the market," said Stephen Pope, managing partner at Spotlight
Ideas, in a note. "What does it take for this bank to act with a
sense of urgency[?] No wonder the eurozone will stay in decline
during 2015, as neither politicians or central bankers are prepared
to commence or carry on with the next round of heavy lifting."
Energy and mining stocks led losses on the Stoxx 600. Shares of
Norwegian oil-services company Seadrill Ltd. put in the worst
performance, falling 5.6%. Bank stocks struggled, with a 3.4% drop
for Germany's Commerzbank SA and a 3.1% fall in Italy's UniCredit
SA . Spain's Bankia SA lost 3.4%, while National Bank Greece SA
gave up 3.4%.
The euro (EURUSD) jumped to $1.2444, compared with $1.2317
before the start of the event. The euro late Wednesday traded
around $1.2311, at two-year lows.
The "short-covering bounce in the euro" came as the "sense of
urgency that Draghi (and European Central Bank Vice President Vitor
Constancio) had appeared to express in recent speeches did not seem
to be reflected in the press conference," said currency analysts at
Brown Brothers Harriman in a note.
Draghi said launching full-blown QE wouldn't require a unanimous
decision from the ECB's policy makers, and BBH noted there was a
"clear precedent for this" in other stimulus actions opposed by
Germany.
The ECB president also rebuffed a suggestion QE might be illegal
under EU laws covering the financing of member states' debt. "We
are convinced that a QE program that could include sovereign bonds
will fall within our mandate," he said. "Not to pursue our mandate
would be illegal."
Holding to gains on Thursday, Ryanair Holdings PLC rallied 8.3%
after the budget carrier raised its full-year profit forecast on
strong figures from the November period. TUI Travel PLC shares
climbed 3.6% as the vacation-packages company's fiscal 2014
underlying operating profit came in above its recently raised
outlook.
The Stoxx 600 on Wednesday marked its highest close since early
June, rising 0.6% to 349.34.
Germany's DAX 30 on Thursday fell 1.1%, France's CAC 40 index
declined 1.4%, and the U.K.'s FTSE 100 moved 0.5% lower.
Also, Italy's FTSE MIB dropped 2.3%, and Greece's Athex
Composite lost 1.6%. Spain's IBEX 35 slumped 2.3%.
Meanwhile, the Bank of Russia said Thursday the slide in the
country's currency is posing a risk to financial stability, and
announced another step aimed at curbing the ruble's decline. The
ruble (USDRUB) gave up earlier gains, leaving the greenback to buy
54. 271 rubles, compared with 53.038 rubles on Wednesday.
The ruble has dropped roughly 40% against the dollar this year.
Russian President Vladimir Putin in a speech to lawmakers and top
officials Thursday said the ruble has been subject to "speculative
attack" and called on officials to take action to discourage
further weakening.
Russian stocks lost 1% to 1,590.65 on the MICEX index.
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