By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets erased earlier
gains on Thursday afternoon, hit by a slide in U.S. stocks,
including Apple Inc., after the opening bell.
U.K. stocks were further beaten by comments from Bank of England
Gov. Mark Carney, who said the first interest-rate hike is inching
closer.
Major movers: Shares of Hennes & Mauritz AB slid 4.2% after
the Swedish fashion retailer said sales in the fiscal fourth
quarter got off to a slow start.
Air France-KLM rose 1.2% after the airline said it has given up
on plans to expand its Transavia low-cost airline across Europe, in
a bid to halt a strike by its French pilots. Read about more about
European stock movers.
Dovish Draghi: In an interview with Lithuanian business
publication Verslo Zinios, European Central Bank President Mario
Draghi reiterated the central bank will "use additional
unconventional instruments within our mandate" if necessary to
combat a "too prolonged period of low inflation." Economists expect
the "unconventional" stimulus measures could be a full-scale
quantitative-easing program.
The comments also echoed remarks Draghi made in the European
Parliament on Monday.
The ECB meets next Thursday, but after announcing a rate cut and
a "mini" QE package at the September meeting, the central bank is
likely to keep monetary policy on hold in October.
Market reaction: Stock markets in Europe had opened the day in
positive territory, aided by Draghi's dovish remarks. But the main
benchmarks slipped into the red after the U.S. markets opened with
firm losses, with some citing a weaker-than-expected reading on
durable-goods orders. Others say investors should look past that
reading, which was influenced by up-and-down demand for large and
expensive commercial airplanes.
The Stoxx Europe 600 index lost 0.5% to 342.66, after trading as
high as 346.04 earlier in the day.
Germany's DAX 30 index dropped 1% to 9,561.53, while France's
CAC 40 index gave up 0.8% to 4,379.58. The U.K.'s FTSE 100 index
fell 0.8% to 6,654.51 after Carney said the central bank is getting
closer to the first rate hike, but qualified that increases in
borrowing costs likely will be gradual and limited. A hike could
come as early as next year, economists predict.
The euro (EURUSD) against the dollar in response to Draghi's
comemnts, trading at $1.2748, from $1.2780 late Wednesday in New
York.
"The prospect that further ECB action will eventually occur is
likely to maintain downward pressure on the euro," said Howard
Archer, chief U.K. and European economist at IHS Global Insight, in
a note. "This is clearly helpful for eurozone growth prospects and
a development that the ECB is far from unhappy to see."
Subscribe to WSJ: http://online.wsj.com?mod=djnwires