European stocks fell after Mario Draghi said the European Central Bank will gauge the need for further stimulus early next year, quelling speculation the lender would start buying sovereign bonds soon.
The Stoxx Europe 600 Index slid 1.3 percent to 344.84 at the close of trading in London. The ECB also lowered its forecasts for euro-area inflation and gross domestic product through 2016. The stocks gauge gained as much as 0.5 percent, before losing as much as 1.4 percent.
“Markets had expected more than the ECB could deliver,” Henrik Drusebjerg, who helps manage 14 billion euros ($17 billion) as chief strategist at Carnegie Investment Bank AB in Copenhagen. “The ECB needs to see the effects of the current measures implemented and also assess the effect of the significantly lower oil price on the European economy.”
The Stoxx 600 rallied 13 percent from a low in October through yesterday amid optimism the ECB will eventually embark on government-bond purchases, while central banks in China and Japan boosted stimulus. Since June, the central bank has cut interest rates twice, offered cheap loans to banks to spur lending and started purchase programs for covered bonds and asset-backed securities.
The ECB and the Bank of England left their interest rates unchanged, as predicted by economists in a Bloomberg survey.
Banks, miners and energy shares posted the biggest declines on the Stoxx 600. Banco Santander SA lost 3.2 percent and BNP Paribas SA dropped 2.3 percent. Total SA and Royal Dutch Shell Plc fell more than 2 percent, while Rio Tinto Group and Anglo American Plc slid at least 2.5 percent.
Of the 18 western-European markets, Italy’s FTSE MIB Index and Spain’s IBEX 35 Index declined the most, falling more than 2 percent. France’s CAC 40 Index lost 1.6 percent and Germany’s DAX Index dropped 1.2 percent.
Among companies that moved on corporate earnings, Ryanair Holdings Plc, Europe’s largest discount airline, jumped 8.4 percent after raising its annual profit forecast for the third time this year. EasyJet Plc, the second biggest, gained 2.9 percent after saying the number of passengers increased in November from a year earlier. TUI Travel Plc added 3.6 percent after reporting that full-year underlying operating profit rose.
Barratt Developments Plc and Taylor Wimpey Plc advanced more than 2 percent after the London Stock Exchange Group Plc said the U.K. house builders will be added to the FTSE 100 Index. The changes are effective on Dec. 22.