- ECB and BoE keep policy unchanged
- German industrial production falls
- Russia imposes counter-sanctions
- US weekly jobless claims fall
CAC 40: -1.36%
FTSE MIB: -1.94%
IBEX 35: -1.64%
Stoxx 600: -0.68%
European stocks declined after European Central Bank (ECB) President Mario Draghi warned of risks to the recovery, including geopolitical tensions in Russia.
Speaking at a press conference on Thursday after the monetary authority decided to keep policy on hold, Draghi said that the economic recovery remained "weak, fragile and uneven".
The president also said inflation would remain low for some time before gradually increasing and that further stimulus was not on the horizon.
The latest Eurozone inflation figures showed a drop to 0.4% in July, the lowest level since October 2009.
Draghi blamed energy and food prices along with an unfavourable exchange rate
for the fall.
In June, the ECB cut its benchmark rate from 0.25% to 0.15% and became the first major central bank to introduce negative interest rates.
"After the meaningful easing of monetary conditions triggered by the June measures, the ECB is now in a wait-and-see mode, waiting for the stimulus to feed through to the real economy," accorinding to UniCredit vice president, Marco Valli. "There was nothing today that challenged this view."
Draghi also highlighted that Russia's counter-sanctions announced on Thursday could present a possible threat but was too early to tell how it would affect the euro-area exactly.
Russian Prime Minister Dmitry Medvedev said the restrictions include all cheese, fish, beef, pork, fruit, vegetables and dairy products after the European Union, US, Canada, Australia and Norway imposed sanctions against Russia for its insurgence in Ukraine.
The euro fell 0.20% to $1.3356 following the meeting.
BoE keeps policy unchanged
The Bank of England (BoE) announced it would keep interest rates at a record 0.5% low and asset purchases at £375bn, as expected by analysts.
Speculation of an earlier-than-predicted interest rate hike has been growing amid signs of a pick-up in UK economic growth.
The National Institute of Economic and Social Research (NIESR) on Tuesday predicted the BoE could raise interest rates as soon as February while most BoE policymakers expect an increase in mid-2015.
Berenberg said on Thursday that the inflation report on 13 August should leave open the possibility of a November rate hike.
"Those forecasts are a key signalling device and we look for the central bankers to raise their growth expectations and show inflation returning to the 2% inflation target by the end of its three-year forecast window," Berenberg chief economist Rob Wood said.
"That would leave plenty of room for a majority of rate setters to support a hike by November. A very dovish forecast would, of course, make a November hike unlikely."
Meanwhile, German industrial production fell 0.5% year-on-year in June, after rising 1.1% in May, surprising analysts who predicted a 0.3% increase.
In the US, jobless claims dropped to 289,000 in the week to 2 August, the Labor Department reported. It was down from a revised 303,000 the week before and better than the 304,000 expected by analysts.
Nestle gained after announcing an 8bn Swiss franc share buyback and reiterated its full-year sales forecast.
Commerzbank rallied as the German bank posted a rise in second-quarter net income as it shed unwanted assets.
Munich Re declined after the world's biggest reinsurer announced profit that missed estimates.
Adidas retreated as the sports-gear maker cut its profit forecast for 2014 following a drop in first-half revenue in North America.
Beiersdorf slumped as the maker of Nivea body wash reported first-half organic sales growth that fell short of analysts' estimates.
Aviva was up after the UK insurer posted a 4% increase in operating profit to £1.05bn, ahead of forecasts.
Brent crude futures dropped 0.28% to $104.29 per barrel, according to the ICE.