UKX FTSE 100 Index

By Carla Mozee and Sara Sjolin, MarketWatch

SCA shares rally on report of $22 billion bid for hygiene unit

European stocks slid Thursday, with banks leading the charge south after President Donald Trump's comments about the dollar and interest rates.

The Stoxx Europe 600 index fell 0.4% to close at 380.58, retreating after ending Wednesday's session at its highest since early December 2015.

Thursday marks the last day of the trading week, as the equity market will be closed tomorrow in observance of Good Friday. Trading will also be closed Monday in observance of Easter.

Read:When are European stock markets closed for Easter? (http://www.marketwatch.com/story/when-are-european-stock-markets-closed-for-the-easter-holiday-2017-04-12)

For the shortened week, the Stoxx 600 logged a loss of 0.2%, its first pullback in three weeks.

Dollar and Trump: The dollar was knocked down late Wednesday, and was still under pressure Thursday, after President Trump told The Wall Street Journal the U.S. currency "is getting too strong" (http://www.marketwatch.com/story/trump-comes-around-to-the-sound-of-the-phrase-strong-dollar-2017-04-12) and he would prefer the Federal Reserve to keep interest rates low.

This is a "dramatic shift in rhetoric" from the U.S. president, given they contradict two of his key themes on the election campaign trail, said Marios Hadjikyriacos, an IronFX analyst, in a note. Trump had promised action against China and others he saw as currency manipulators, and had said the Fed's policy approach was keeping a lid on interest rates.

Read: J.P. Morgan says the Trump/Ryan premium is fading (http://www.marketwatch.com/story/stock-market-will-be-stuck-in-purgatory-until-this-happens-2017-04-12)

"With Trump backpedaling on higher rates and currency manipulators, markets could become increasingly more skeptical regarding his ability and/or willingness to deliver on the rest of his agenda, namely tax and regulatory reform," Hadjikyriacos said.

"Heightened concerns on these issues could lead to a further unwinding of the post-election rally in [the dollar] and equities," he noted.

Read: Jack Bogle on how to invest in a time of Trump: 'Be realistic' (http://www.marketwatch.com/story/jack-bogle-on-how-to-invest-in-a-time-of-trump-be-realistic-2017-04-13)

Banks in focus: Trump's comments sent 10-year U.S. Treasury yields to an almost five-month low, pulling European bond yields lower with them. Higher bond yields tend to boost bank profitability as they can charge more for their loans.

Shares of Credit Agricole SA (ACA.FR) fell 1.7%, HSBC Holdings PLC (HSBA.LN)(HSBA.LN) (HSBA.LN) lost 1.7% too and Commerzbank AG (CBK.XE) gave up 1.1%.

Banks were also in focus across the Atlantic, where banking heavyweights Citigroup Inc. (C), J.P. Morgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) released financial results. J.P. Morgan and Citi both beat expectations, but Wells Fargo's revenue fell short of forecasts.

Bank shares globally have risen on the prospect the Trump administration will relax rules for financial firms, but those hopes have been tempered on uncertainty about the implementation of that policy. The Stoxx Europe 600 Bank Index ended down 1.2% on Thursday.

Other movers: Svenska Cellulosa AB shares (SCA-B.SK) rallied 7.8% after Swedish newspaper Dagens Nyheter said a group of private-equity firms were seeking to buy SCA's hygiene unit for roughly 200 billion Swedish crowns ($22 billion).

National indexes: Germany's DAX 30 index lost 0.4% to 12,109, and France's CAC 40 shed 0.6% at 5,071.10.

The U.K.'s FTSE 100 fell 0.3% to 7,327.59. (http://www.marketwatch.com/story/banks-miners-drag-ftse-100-lower-2017-04-13)

(http://www.marketwatch.com/story/banks-miners-drag-ftse-100-lower-2017-04-13)The euro was buying $1.0631, compared with $1.0668 late Wednesday in New York.

(END) Dow Jones Newswires

April 13, 2017 12:34 ET (16:34 GMT)

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