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Europe close: Stocks dip, but finish well off session lows

By Alexander Bueso

Date: Thursday 17 Sep 2020

(Sharecast News) - European shares finished weaker on Thursday but well off their intraday lows as investors digested more dovish than expected remarks from central banks around the world, not least from the US Federal Reserve overnight.
Rate-setters on the Potomac signalled that they expected borrowing rates to remain close to zero through 2023 and yet shares fell.

"The problem with raising expectations to such a significant degree heading into the meeting is that when the Fed does deliver an extremely dovish statement - and it very much was that - everyone is left feeling a little underwhelmed, even disappointed," said Craig Erlam, senior market analyst at Oanda.

"But there is absolutely no reason to be so."

The pan-European Stoxx 600 index was down 0.51% at 371.23, alongside a 0.36% drop on the German Dax to 13,208.12 while the FTSE Mibtel declined 1.12% to 19,739.73.

Predictably, it was banks that sported the biggest losses on the Stoxx 600, with their sector gauge down by 1.63%, alongside a 1.13% fall for Basic Resources and a 0.99% drop for Technology.

In corporate news, shares in German financial services company Grenke bounced back from Wednesday's plunge on news it was under investigation after a report by a short-selling investor research company alleged it of market manipulation, money laundering and fraud.

Grenke has strongly rejected the report, published by Fraser Perring of Viceroy Research. Shares of Frankfurt-listed Grenke fell by almost a third on Wednesday, but were up nearly 6% in early Thursday trade.

Car makers Renault and Volkswagen were lower after data showing new-car registrations slumped 18.9% in August and 5.7% in July. German registrations fell 20% and French registrations 19.8%, according to the European Automobile Manufacturers Association.

On the upside, retailer Next rallied as it posted a decline in half-year pre-tax profit to £9m from £320m but upgraded its profit guidance after sales in the first half and beyond held up better than it had expected. Next increased its central guidance for annual pre-tax profit to £300m from £195m.

FTSE 250 online trading platform IG Group was also a gainer as the firm posted a big jump in first-quarter revenue on Thursday as it continued to benefit from high levels of trading activity and new client acquisition.

Back on the macroeconomic front, the minutes of the Bank of England's latest rate meeting showed policymakers were preparing further contingency plans in case negative interest rates should be needed.

Similarly, at least one European Central Bank governing council member, Olli Rehn, was quick to point out that monetary policy on the Continent does not operate in a vacuum.


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