Europe Markets: European stocks drive higher as ECB plans to end bond buys in December

Stocks across Europe pulled back Thursday, as mining shares were bruised by concerns about China’s economic health, and as investors prepared to learn whether the European Central Bank has a time frame for winding down its bond-buying program.

How markets are performing

The Stoxx Europe 600 Index SXXP, +0.46% fell 0.5% to 388.20. No sector moved higher, and the biggest decliner was the basic materials group. On Wednesday, the pan-European benchmark rose 0.2%.

Germany’s DAX 30 index DAX, +0.58% lost 0.4% to 12,838.55, and France’s CAC 40 index PX1, +0.76% moved 0.6% lower to 5,420.71.

Spain’s IBEX 35 IBEX, +0.24%  shed 0.3% to 9,868.70, while Italy’s FTSE MIB index I945, +0.24% declined 0.9% to 22,207.68.

Read: The ECB can’t rescue Italy from its next crisis

The U.K.’s FTSE 100 UKX, +0.35%  moved down 0.6% to 7,659.08.

The euro EURUSD, -0.9330% traded at $1.1815, up from $1.1791 late Wednesday in New York.

What’s driving markets

Mining stocks were the biggest losers, after downbeat data out of China, the world’s largest buyer of copper and a major buyer of other industrial and precious metals. Business activity in China slowed in May, and readings on industrial output, retail sales and fixed-asset investment from the National Bureau of Statistics fell short of expectations.

Investors also took notice of a decision by the People’s Bank of China to stand pat on interest rates, breaking a pattern of raising rates in the footsteps of the U.S. central bank.

The Stoxx Europe 600 Basic Materials Index SXPP, -0.45%  dropped 1.5%. Copper producer Antofagasta PLC ANTO, -1.39% , Centamin PLC CEY, -1.34%   Glencore PLC GLEN, -0.85%  off by 1.4%, and BHP Billiton PLC BLT, -0.61% BLT, -0.61%  lower by 1.4%.

As expected, the U.S. Federal Reserve on Wednesday lifted its benchmark federal funds rate by a quarter-percentage point — to a range of 1.75% to 2%. It also signaled it will raise rates a total of four times in 2018, compared with a previous outlook for three hikes. Wednesday’s rate increase was the second of the year.

Attention now turns to the ECB, which is discussing when to end its €2.5 trillion ($2.95 trillion) program of bond buying, or quantitative easing. Its policy statement is scheduled for release at 12:45 p.m. London time, or 7:45 a.m. Eastern Time. ECB President Mario Draghi will hold a press conference at 1:30 p.m. London time, in Riga, Latvia.

Read: Investors brace for ECB ‘close call’ on when to start winding down QE

And see: The ECB, not the Fed, is the match that will spark bond market volatility: analyst

What strategists are saying

“Firstly, [ECB] policymakers will have to weigh up a number of conflicting signals with respect to the European economy which is showing signs of slowing sharply,” said Michael Hewson, chief market analyst at CMC Markets, noting that production in France and Germany has weakened.

“Secondly, policymakers will have to establish whether this rebound in the rate of inflation is transitory, in order to at least allow them to adopt an approach that doesn’t box them into a corner when they start to discuss how to execute a possible exit policy,” he added.

Stock movers

Aveva Group PLC AVV, +12.01%  rallied 14%. The industrial-software company said it was maintaining its dividend even as fiscal 2018 pro-forma pretax profit fell 34%, stemming in part from reverse acquisition by France’s Schneider Electric SE SU, +0.78%

Unilever PLC ULVR, -3.47%  fell 3.7%. The consumer goods maker’s Chief Financial Officer Graeme Pitkethly warned sales growth in the first half of 2018 will be below the full-year target of 3% to 5% , but maintained sales guidance for the year. Pitkethly also said it is “extremely unlikely” Unilever will maintain a primary listing in London after its move to consolidate in Rotterdam.

Shares of European payment processor Adyen NV ADYEN, +0.35%  rose 3.7% to €471.40. The shares in their trading debut on the Euronext Amsterdam exchange Wednesday doubled during that session. The shares, priced at €240 each, ended at €455.00.

Read: Adyen IPO: 5 things to know about the PayPal rival

Rolls-Royce Holdings PLC shares RR., +3.91% jumped 2.7% after the British aircraft-engine maker said it will cut 4,600 jobs in its latest round of job reductions.

Economic data

Retail sales for the U.K. in May outstripped forecasts, as a stretch of good weather and Royal Wedding celebrations gave a fillip to spending in food and household goods stores.

Sales were up 1.3% on the month, the Office for National Statistics said. A print of 0.5% was expected. They were up 3.9% year-over-year, compared with 2.4% expected in a FactSet consensus estimate.

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