European stocks slip before key ECB meeting


LONDON — European stock markets fell Thursday with all eyes on the ECB’s first policy meeting of the year. The European Central Bank gathering Thursday comes a day before Donald Trump’s post-inauguration speech, with investors hoping he will flesh out U.S. presidential campaign promises on the economy. Around 1100 GMT, London’s benchmark FTSE 100 index was down 0.6 percent, as the pound recovered from three-month lows against the dollar, which was down also versus the euro.

In the eurozone, Frankfurt’s DAX 30 index lost 0.1 percent and the Paris CAC 40 slid 0.3 percent, compared with the close on Wednesday. The ECB will not deviate from its ultra-loose monetary policy at its first 2017 meeting, analysts predicted, in the face of calls to tighten from critics alarmed by rising inflation. “Inflation pressures are starting to build especially in Germany, thus explaining the German criticism of the ECB’s accommodative stance,” noted VTB Capital economist Neil MacKinnon. Policymakers at the Frankfurt institution chose in December to keep interest rates at historic lows and extend mass bond-buying, albeit slowing the purchases from 80 billion to 60 billion euros (US$85 billion to US$64 billion) per month from April. The economic consequences of Brexit and the U.S. election of Trump are as yet unclear for the 19-nation eurozone and the ECB is likely to be mindful of a series of elections this year in France, Germany, the Netherlands, and possibly Italy.

“Today, in their first (ECB) meeting of 2017 they are not expected to do anything further with the most recent minutes highlighting sharp divisions between various policymakers about extensions and monthly amounts,” said Michael Hewson, chief market analyst at CMC Markets UK. “It is already thought unlikely that ECB President Mario Draghi would be able to carry the council to add additional stimulus this year in any case, particularly with a German election coming up in September,” he added in a client note.