LONDON (ShareCast) - European stocks opened down on Thursday morning, pulling back after yesterday’s rally on the back of a co-ordinated intervention by major central banks to provide cheap access to dollar funding.

News that the People’s Bank of China (PBOC) had lowered the legal reserve requirement for Chinese banks by 50 basis points sent equities soaring before midday on Wednesday. These gains were given an extra boost after six central banks, including the Federal Reserve and the Bank of England, announced that they had agreed to lower the pricing on existing temporary US dollar liquidity swap arrangements by 50 basis points.

Following 3-5% gains yesterday, benchmarks indices across the continent nudged lower. The CAC 40 Index in Paris was 30 points lower (-0.96%) at 3,124, the IBEX 35 fell 49 (-0.58%) to 8,400 in Madrid, while the DAX in Frankfurt was 59 down (-0.96%) at 6,030. The Stoxx Europe 600 Index was trading 0.58% down by 10:19 in Paris this morning.

Financials led the decline on France’s CAC 40 index, with Credit Agricole, Societe Generale and Natixis taking up the top spots on the fallers list.

Norweigan aluminium and energy firm Norsk Hydro fell in Oslo after saying that it expects to see demand growth slow down in 2012. “Growth outside China is expected to continue in 2012, although at a slower pace of around 3-5%,” said chief executive Svein Richard Brandtzæg. This is down from the 19% growth seen in 2010 and the 7% increase achieved in 2011.

Dutch life insurer Aegon was out of favour after Nomura downgraded its rating from buy to neutral.

In other news, Spain is to sell €3.75bn of government bonds today, while France will look to auction up to €4.5bn of debt.

BC

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