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European Shares Drop After ECB Stays Put, More Strong US Data

Posted
12/5/2013 12:30:00 PM
By: MT Newswires
Referenced Stocks:CS

European stocks slumped after European Central Bank (ECB) President Mario Draghi gave no sign of imminent monetary policy easing and more strong US data added fuel to speculation the Federal Reserve may begin tapering its stimulus.

Q3 US GDP grew at a 3.6% annual rate instead of the 2.8% pace reported earlier, the Commerce Department said on Thursday. Economists polled by Reuters had expected output would be revised up to only a 3% rate.

US jobless claims fell by 23,000 last week to 298,000.

These data follow reports on Wednesday that included a larger-than-expected gain in private payrolls and positive home sales.

The ECB left its key lending rate unchanged at 0.25%, as expected. It expects inflation at 1.4% in 2013, at 1.1% in 2014 and at 1.3% in 2015, below the bank's target of 2%. The forecast for 2013 was a 0.1 percentage point cut from the bank's September forecast, while for 2014 it was revised downwards by 0.2 percentage points.

In the UK, the Bank of England, also as forecast, left monetary policy unchanged.

The UK Office for Budget Responsibility raised its 2013 growth forecast to 1.4% from the 0.6% that it predicted in March. I also said GDP will climb 2.4% in 2014. It had projected growth next year of 1.8%.

Spanish stocks found some support from a credit rating outlook upgrade by Moody's.

In ADR news, Credit Suisse ( CS ) said it will sell its German private bank to ABN Amro's Bethman Bank.

The FTSE-100 was last down 0.18% at 6,498.33, the DAX down 0.61% at 9,084.95 and the CAC-40 down 1.17% at 4,099.91.