Most stocks in Europe fell as an unexpected European Central Bank interest rate cut pointed to prolonged weak growth in the region and stronger U.S. economic data fueled speculation the Federal Reserve may reduce the pace of its bond buying in the coming meetings.
The Stoxx Europe 600 Index lost less than 0.1% to 323.23 at the close of trading, paring earlier gains of as much as 1.5%.
The ECB lowered its benchmark interest rate to 0.25% from 0.5%, as forecast by three of 70 economists in a Bloomberg survey. The rest predicted no change. The ECB expects key interest rates to remain at the current level or lower for an extended period of time, President Mario Draghi said at a press conference after the announcement.
The Bank of England held its key interest rate at 0.5% and its asset-purchase target at 375 billion pounds ($603 billion), matching the median forecast of economists surveyed by Bloomberg.
In the U.S., a Commerce Department report today showed that the world’s biggest economy expanded in the third quarter at a faster pace than forecast. Gross domestic product rose at a 2.8% annualized rate after a 2.5% gain the prior three months, beating the median forecast of economists surveyed by Bloomberg for a 2% advance.
“For the U.S., we’re back to good news is bad news,” said Woischneck. “A strong GDP number means tapering could happen sooner than expected. Markets are so afraid that central banks will cut liquidity.”
HeidelbergCement AG dropped 3.8% after saying third-quarter profit fell 7%.
Bureau Veritas SA lost 3.6% as quarterly sales missed analysts’ estimates.
Siemens AG rose 3.4% after reporting better-than-forecast profit and saying it plans to buy back shares.
Swiss Re Ltd. climbed 1.9% after third-quarter net income exceeded predictions.
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