- ECB announces rate cuts
- German factory orders and Eurozone retail sales rise
- BoE keeps policy unchanged
- US jobless claims rise
FTSE 100: -0.08%
CAC 40: 1.06%
FTSE MIB: 1.52%
IBEX 35: 1.12%
Stoxx 600: 0.42%
Stocks in the euro-area were mostly higher after the European Central Bank (ECB) announced a lowering of the deposit rate into negative territory for the first time in the history of any major central bank.
The decision to cut the deposit rate by 10 basis points to -0.10% was expected by analysts and comes amid concerns over weak inflation, which at 0.5% remains well below the ECB's target of just under 2%.
The ECB also decided to slash interest rates by 10 basis points to 0.15%, slightly less than the 15 basis point drop that was forecast.
The changes will come into effect on June 11th.
The ECB avoided full-blown quantitative easing but President Mario Draghi said the central bank was "not necessarily finished yet" and would consider unconventional measures if needed in future.
In an initial reaction the euro/dollar moved lower towards $1.35 but as of 16:35 was trading 0.13% higher at $1.3616.
"Whether or not the measures have staying power with the euro are an entirely different story: President Draghi indicated that rates were at the lower bound," said Christopher Vecchio, Currency Analyst at DailyFX.
"For all intents and purposes, Draghi carried a big stick, but did not necessarily pack the punch required to keep the euro in a persistent subdued state."
Ahead of the meeting, a report from Eurostat showed Eurozone retail sales rose by 2.4% year-on-year in April following a 1% increase in March, marking the strongest annual growth in seven years. It beat market forecasts for a 1.2% gain.
German factory orders rose by 6.3% in April after a 1.5% increase in March, ahead of expectations for a 4.6% advance.
BoE keeps policy unchanged
The Bank of England (BoE) decided to keep interest rates at the record low of 0.5% and asset purchases at £375bn, as expected.
However, analysts said that the prospect of an early rate rise has increased in recent weeks amid a string of resilient economic data including rampant UK house prices.
Chris Williamson, Markit's Chief Economist, said that there's "no doubt that the economy is firing on all cylinders" and the unanimous backing that policymakers have given BoE Governor Mark Carney in recent months could soon start to wane.
US initial weekly unemployment claims increased by 8,000 in the week ended May 31st, to reach 312,000, according to the US Department of Labor today.
The previous week was revised higher to show 304,000 claims, versus the initial estimate of 300,000.
It comes ahead of the Labor Department's private payrolls report, on Friday, which may reveal private payrolls, which exclude government agencies, increased by 210,000 in May after a rise of 273,000 a month earlier, according to forecasts.
Federal Reserve policymakers are monitoring the labour market closely to determine whether to continue tapering bond purchases and the timing of the first interest rate increase since 2006.
Deutsche Bank slides
Deutsche Bank declined after offering shareholders a discount of more than 20% to buy new stock.
Deutsche Telekom gained following reports that Sprint Corp. is close to clinching a deal on the price, capital structure and termination fee of an acquisition for T-Mobile US.
Smith & Nephew jumped as Medtronic Inc. was said to be considering a takeover of the UK company.
Volvo dropped as UBS recommended selling shares
in the carmaker.
Asos slumped as the online fashion retailer forecast that earnings before interest and taxes will be about 4.5% of sales for the year through August, compared with a previous margin estimate of 6.5%.
Bellway edged higher as the UK homebuilder said demand for new homes remains robust and it is on track to achieve its annual volume target.
Brent crude futures rose $0.074 to $108.480 per barrel, according to the ICE.