By Tommy Stubbington
Markets largely shrugged off the European Central Bank's latest
monetary policy meeting, but the euro weakened against the dollar
following stronger -than-expected jobs growth in the U.S.
ECB Chief Mario Draghi struck a cautious tone in his monthly
news conference Thursday, running through technical details of the
central bank's plan to provide cheap loans to euro-area banks.
That formed part of a package of measures designed to head off
troublingly low inflation. The ECB kept rates on hold at record
lows in July, as was widely expected.
Markets showed little reaction, with European stocks holding on
to early gains. The euro sank slightly against the dollar, shedding
0.4% to a one-week low of $1.3596.
But the catalyst came from the U.S., where July's monthly jobs
report topped expectations. The dollar posted gains against a range
of currencies, while the euro was little-changed against the
yen.
The common currency remains above the level where it traded
before last month's ECB rate cuts.
Mr. Draghi reiterated earlier comments on the exchange rate,
saying it isn't a policy target for the ECB, but is relevant to the
inflation outlook.
"There is been no big surprise from Mr. Draghi. He's still
dovish and still says the exchange rate is important," said Steven
Saywell, global head of foreign-exchange strategy at BNP
Paribas.
"It is more about the nonfarm payrolls today," he added.
Longer term, some analysts think last month's easing package
could make a bigger dent on the euro.
Mr. Draghi said its program of cheap loans to banks could total
as much as a trillion euros.
"If Draghi is right the ECB balance sheet would grow
considerably over time. Given the historic link between [the
eurodollar exchanged rate] and the ratio of Fed/ECB balance
sheet--this should underscore the downside risks to [the euro],"
said Valentin Marinov at Citigroup.
In equity markets, the Stoxx Europe 600 was 0.7% higher,
extending a two-day rally.
Stocks added to gains as Wall Street opened strongly, with the
Dow Jones Industrial Average topping 17000 points for the first
time.
Germany's DAX led the way in Europe, adding 0.9%. France's CAC
40 climbed 0.7%, while outside the euro zone London's FTSE 100 was
up 0.6%.
In corporate news, shares in Ingenico climbed after the French
card-payment device maker said it agreed to buy GlobalCollect, an
Amsterdam-based online-payment service provider, for EUR820 million
($1.12 billion) late Wednesday.
Shares in Balfour Beatty sank sharply after a profit warning
from the firm's electrical-engineering division.
In commodities markets, gold was 1.0% lower at $1,317.30 an
ounce, and Brent crude oil was 0.3% lower at $110.91 a barrel.
Write to Tommy Stubbington at tommy.stubbington@wsj.com