By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets retreated
Thursday, after higher-than-expected Chinese inflation data stoked
fears the Chinese government will withhold more easing
measures.
U.K. stocks were also slightly lower, after the Bank of England
left interest rates unchanged.
The Stoxx Europe 600 index slipped 0.1% to 303.37, after closing
at the highest level since June 2008 on Wednesday.
Among biggest decliners, shares of Banco Espirito Santo SA
slumped 3.6%, after J.P. Morgan Cazenove cut the Portuguese bank to
underweight from neutral.
Shares of miner Eurasian Natural Resources Corp. dropped 6.8%,
after the firm reported mixed first-quarter output results with
iron ore, ferroalloy and aluminum down on the year, while copper
output improved in the period.
Bucking the negative trend, shares of Experian PLC jumped 6%.
The credit-report firm said it would continue to buy its own
shares, while also raising full-year dividends 9%. The company,
however, posted a 36% drop in pretax profit for the full year.
For the broader European stock markets, investors looked east
where most Asian bourses fell after data showed consumer prices
rose more than expected in China. The April CPI rose 2.4% from a
year earlier, topping analysts forecasts and increasing more than
the 2.1% reported in March.
Some analysts feared that the rising inflation may discourage
the Chinese government from easing policy further, which would mean
less liquidity injected into the economy.
"Should this happen then the consequences will likely be played
out on a global basis, but given the overshoot was so limited, the
caution may be somewhat exaggerated by the fact markets are simply
looking a bit toppy at these levels," said Fawad Razaqzada, market
strategist at GFT Markets, in a note.
In the U.S., stock-index futures pointed to a lower open on Wall
Street, after the Dow Jones Industrial Average (DJI) and S&P
500 index (SPX)both closed at all-time peaks on Wednesday.
Monetary policy was also on the agenda in the U.K., after the
Monetary Policy Committee at the Bank of England on Thursday
decided to leave the key lending rate at a record low of 0.5%,
where it has stood since March 2009. The central bank also left the
size of its asset-purchase program unchanged at 375 billion pounds
($582.90 billion). Both decisions were expected by most
analysts.
The U.K.'s FTSE 100 index was slightly lower at 6,581.99.
Shares of Standard Chartered PLC shaved off 2.4% after J.P.
Morgan Cazenove cut the bank to neutral from overweight a day after
the company reported a drop in first-quarter profit.
British Sky Broadcasting Group PLC sank 6%, after BT Group PLC
revealed its new sport commercial TV packages for pubs and hotels
at significantly lower prices than Sky. Shares of BT lost 2.3%.
France's CAC 40 index posted one of the biggest drops among
country-specific indexes, down 0.8% at 3,925.01.
Heavyweight drug maker Sanofi SA (SNY) lost 0.9%, as the stock
went ex-dividend, meaning new investors will miss out on the latest
dividends.
In Germany, the DAX 30 index was 0.1% lower at 8,242.86,
wavering around the all-time closing high reached on Wednesday.
Shares of Kloeckner & Co. SE added 2.1% in Frankfurt, after
Citigroup lifted the steel trader to neutral from sell.
Portugal's PSI 20 index lost 0.4% to 6,239.24, after data showed
unemployment rose to 17.7% in the first quarter of 2013, up 2.8
percentage points from the same quarter last year and up 0.8
percentage points from the previous quarter.
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