By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets retreated
following two positive trading days on Thursday, after
higher-than-expected Chinese inflation data stoked fears the
Chinese government will withhold more easing measures.
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 sank
4.4%, after J.P. Morgan Cazenove cut the Portuguese bank to
underweight from neutral.
Shares of miner Eurasian Natural Resources Corp. dropped 1.5%,
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 5.9%.
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 to ease the economy 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., ahead of the
Bank of England's latest policy decision due at noon London time,
or 7 a.m. Eastern. Most analysts expect the central bank to keep
interest rates at a record low 0.5% and make no changes to its
asset-purchase program.
The U.K.'s FTSE 100 index was slightly lower at 6,580.72.
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.
France's CAC 40 index posted one of the biggest drops among
country-specific indexes, down 1% at 3,916.64.
Heavyweight drug maker Sanofi SA (SNY) shaved off 1.3%, 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 8,242.35,
wavering around the all-time closing high reached on Wednesday.
Shares of Kloeckner & Co. SE added 2.4% in Frankfurt, after
Citigroup lifted the steel trader to neutral from sell.
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