By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets showed mixed moves on Wednesday, with French banks lifting the CAC 40 index, while U.K. stocks slumped after the Bank of England wasn’t as dovish as hoped in its inflation report.
The Stoxx Europe 600 index XX:SXXP -0.14% lost 0.2% to 303.02, after snapping a six-day winning streak on Tuesday. It pared earlier losses though.
Shares of TUI Travel PLC UK:TT -5.01% slid 4.8% in London after the travel agency reported an operating loss for the nine-month period to June 30.
Shares of Randgold Resources Ltd. UK:RRS -1.42% GOLD +0.99% shaved off 2.6% after the gold miner reported second-quarter profit below expectations. Other miners were also lower as most metals prices declined. Heavyweight Rio Tinto PLC UK:RIO -1.48% AU:RIO -2.10% RIO -0.02% dropped 1.3% and BHP Billiton PLC UK:BLT -1.52% BHP -0.66% AU:BHP -2.02% fell 1.4%.
Shares of Old Mutual PLC UK:OML +3.64% jumped 3.8% after the insurance firm reported a rise in first-half pretax profit and funds under management.
The broader European stock markets struggled to follow the same direction. The U.K.’s FTSE 100 index UK:UKX -1.02% dropped 0.9% to 6,550.03, after the Bank of England provided explicit forward guidance on monetary policy, saying its key rate will remain at a record low of 0.5% until the country’s unemployment rate drops to 7%. However, the pledge failed to spur optimism in the equity market as investors feared the bank would struggle to stick to its guidance if inflation increases too much or the economy improves faster than anticipated.
“The BoE expects unemployment to fall to 7% by late 2016, but recent pickup in economic data suggests this could be a lot sooner,” said Fawad Razaqzada, technical analyst at GFT.
“However, Carney warned that the 7% threshold is not ‘a promise on rates and a breach won’t imply immediate rate rise.’ What’s more, he said the BoE’s ‘policy stance will depend on economic conditions’,” said Razaqzada in a note to investors.
“So in other words, the announcement was not as dovish as many had hoped. That’s why following an initial drop, the GBP/USD is rallying and currently is holding above pre-announcement levels,” he said.
The pound GBPUSD +1.00% rose to $1.5461 after trading as low as $1.5196 earlier in the day, according to FactSet.
The U.S. central bank was also in the spotlight on Wednesday, with investors growing more concerned monetary policy will soon become less accommodative. Charles Evans, President of the Chicago Federal Reserve said Tuesday the economy should improve enough in the second half of the year to allow the central bank to scale back its $85-billion-a-month asset purchases.
The comments came after Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, told Market News International that the tapering process could begin at any of the three remaining FOMC meetings this year.
U.S. stocks pointed to a lower open on Wall Street.
France’s CAC 40 index FR:PX1 -0.03% , meanwhile, climbed 0.2% to 4,041.32.
Shares of Sanofi SA FR:SAN +0.72% SNY +0.41% climbed 1.4% after Berenberg lifted the drug maker to buy from hold.
Credit Agricole SA FR:ACA +2.47% added 2.3% to €7.95 a share, after Citigroup lifted the bank’s price target to €10 from €8 and Deutsche Bank upped the target to €8.40 from €7.
Shares of Société Générale SA FR:GLE +2.07% rose 2.5% and BNP Paribas SA FR:BNP +0.34% picked up 0.9%.
Germany’s DAX 30 index DX:DAX -0.58% dropped 0.3% to 8,273.36.
Outside the major indexes, shares of ING Groep NV NL:INGA +5.36% added 5.9% after the Dutch firm said its banking arm posted solid results despite the challenging economic environment, although the group reported a drop in second-quarter profit.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
