European Stocks Drop as Euro Climbs on Draghi's Timing Comment

Danny Blanchflower Expects 'Caution' in ECB Decision

European stocks fell as investors bet exporters will suffer from a stronger euro, after European Central Bank President Mario Draghi’s comments bolstered the single currency.

The Stoxx Europe 600 Index retreated 0.4 percent at the close. The benchmark erased a gain that had reached 0.5 percent before Draghi said officials would discuss altering the central bank’s bond-buying program in an autumn meeting, at a press conference in Frankfurt.

With less than a half year left before quantitative easing’s tentative term ends, policy makers have been debating publicly as to when they might start reducing asset purchases. The euro surged as Draghi said the repricing of the exchange rate had received “some attention,” without pushing back against the currency’s strength. The euro strengthened 1 percent in the biggest gain among 16 major currencies.

  • At the same time, Draghi cautioned that the region’s inflation rate “is still subdued,” and that “a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up.” 
  • “A fairly dovish Mario Draghi failed to keep the euro bulls fully contained,” Neil Wilson, a market analyst at ETX Capital, wrote in a note. “What he did let slip is that the Governing Council is likely to discuss tapering in the autumn.”
  • Raw materials stocks and travel shares led declines in the Stoxx 600 gauge.
  • European stocks are “penalized by the euro strength,” Andrea Tueni, a trader at Saxo Bank, said in an email.
  • Among shares active on earnings, Wartsila Oyj and Boliden AB each rose at least 4.4 percent after reporting second-quarter results that beat estimates.
    • Nordea Bank AB slid 5.2 percent after missing profit estimates and delaying a decision on whether to move its headquarters from Stockholm.
    • ABB Ltd. dropped 2.8 percent as higher commodity prices and overcapacity in some businesses weighed on profit at the world’s largest power-grid maker.

— With assistance by Sofia Horta E Costa, and Elena Popina

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