European Central Bank, Bank of England rate calls on tap
By Sarah Turner, MarketWatch
LONDON (MarketWatch) - European stocks traded lower Thursday ahead of two interest rate decisions, with BP shares in London swooning -- albeit not by as much as in New York -- and other oil producers also dropping.
The Stoxx Europe 600 index (ST:SXXP 244.05, -0.55, -0.23%) lost 0.5% to 243.33, the third loss in four sessions for the index.
Both the European Central Bank and the Bank of England are expected to report their latest decision on interest rates Thursday, with no change expected. Attention will be in particular on the press conference due to start at 8:30 a.m. Eastern. Read central bank preview.
"Uncertainty going into the ECB meeting is very high and we would keep risk low. ECB has a habit of disappointing markets in delivering new measures to fight the crisis (at least at the scheduled meetings) and we see a risk this will happen again," said strategists at Dankse Bank.
The oil and gas sector was the worst performer by a long way on Thursday, hit by an 5.9% drop in BP (UK:BP. 365.80, -25.75, -6.58%) (BP 29.20, -5.48, -15.80%) shares to 369 pence. See full story.
That followed on from a 16% drop to $29.20 in the firm's U.S.-traded shares on Wednesday as questions mounted over whether it can afford to clean up the worst environmental disaster in U.S. history.
Each U.S.-listed share is worth six locally listed ones, implying the BP price in London is around $32.32.
The oil giant, currently battling to contain a massive oil spill in the Gulf of Mexico, said early Thursday that it wasn't aware of any reason that would justify the sharp slide in its U.S.-listed shares on Wednesday. Significant additional cash flow, below-target gearing and a strong asset base above gives it significant capacity and flexibility in dealing with the cost of responding to the incident, the environmental remediation and the payment of legitimate claims, it said. The cost of the response to date is approximately $1.43 billion.
Other oil and gas companies trading lower included Total (FR:FP 37.57, -0.55, -1.43%) , down 1.7%, Repsol (ES:REP 15.95, -0.24, -1.45%) (REP 19.00, -0.26, -1.35%) , down 1.4% and Royal Dutch Shell (UK:RDSA 1,758, -12.50, -0.71%) (RDS.A 50.74, -1.13, -2.18%) , down 0.7%.
Light sweet crude oil futures were up 8 cents at $74.46 a barrel while metal futures were lower. The euro (CUR_EURUSD 1.2011, +0.0031, +0.2588%) rose 0.4% to $1.2027.
Of the regional benchmarks, the U.K. FTSE 100 index (UK:UKX 5,066, -19.58, -0.39%) dropped 0.8% to 5,044.96, the German DAX index (DX:DAX 5,977, -8.01, -0.13%) declined 0.8% to 5,938.56 and the French CAC-40 index (FR:PX1 3,433, -14.09, -0.41%) lost 0.9% to trade at 3,415.74.
U.S. stock futures were slightly higher, with Dow Jones Industrial Average futures up 41 points, indicating a bit of a rebound after Wednesday's sell off. Read more on U.S. stocks.
Of European companies updating investors, Kabel Deutschland (DE:KD8 23.80, +0.39, +1.67%) advanced 0.6% after it narrowed its fiscal-year net loss to 45.3 million euros ($54.6 million), from 144.3 million euros a year ago.
Sales increased 9.6% to 1.5 billion euros. The firm said that growth was driven by continued success in penetrating its customer base with new services, primarily Internet and phone products.
In the U.K., retailer Home Retail Group (UK:HOME 228.00, -10.00, -4.20%) declined 4.6% after it said that comparable sales at both its Argos and Homebase chains declined in the 13 weeks to May 29. Argos sales fell 8.1% while Homebase sales fell 1.4%.
"Economic conditions remain both challenging and uncertain, with this quarter providing difficult in terms of consumers' willingness to spend," said CEO Terry Duddy.
