Euro shares down on policy meeting anticipation; DAX off 0.20%

Investing.com - European stocks extended losses Wednesday, in U.S. holiday slow trade, while investors awaited the outcome of a European Central Bank policy meeting on Thursday.

At the close of European trade, the EURO STOXX 50 lost 0.35%, France’s CAC 40 declined 0.11%, while Germany’s DAX 30 dropped 0.20%.

The ECB was widely expected to announce an interest rate cut to 0.75% from the current record low 1.00% to help bolster growth in the region, following a recent string of weak economic data.

Earlier in the day, the final reading of the euro zone services purchasing managers’ index came in at 47.1 in June, slightly above the preliminary estimate of 46.8, but holding below the 50 level which separates contraction from growth for the fifth consecutive month.

Investors were also awaiting Friday’s U.S. nonfarm payrolls report, amid speculation that the Federal Reserve could implement a third round of quantitative easing to shore up the economy, which has been hit by the ongoing crisis in the euro zone.

Financial stocks pushed broadly lower, led by Italian lender Intesa Sanpaolo, down 2.40%, and closely followed by Germany’s Deutsche Bank, with shares tumbling 2.37%.

France’s two biggest banks, BNP Paribas and Societe Generale, also contributed to losses, declining 1.67% and 0.27% respectively.

Meanwhile, Germany-based Allianz retreated 1.21%, erasing earlier gains posted after the company said it attracted a number of potential buyers in the sale of its European vending machine business Selecta, expected to be worth at least EUR700 million.

On the upside, TF1 jumped 2.73% after UBS upgraded the owner of France’s most-watched television channel to buy, saying the shares look cheap.

In London, FTSE 100 fell 0.20%, as U.K. lenders remained broadly lower and after data showed that service sector activity in the U.K. expanded at the slowest rate in eight months in June.

Shares in the Royal Bank of Scotland tumbled 1.64% and Lloyds Banking plunged 1.60%, while HSBC Holdings and Barclays retreated 1.24% and 0.61% respectively.

Earlier in the day, the Royal Bank of Scotland admitted that mortgage and loan repayments had mistakenly been debited twice from customers’ accounts in the latest chapter of a series of IT glitches that are now heading into their third week.

Meanwhile, Bank of America said the HSBC’s targets are ambitious and analysts’ earnings estimates may be too high.

Energy stocks also remained on the downside, as oil and gas major BP saw shares drop 0.65% and Anglo American fell 0.20%.

Xstrata shares surged 2.13% on the other hand, after Knight Vinke, a top 20 shareholder in the copper producer, demanded that Glencore sweeten its bid to merge with Xstrata, turning up the heat before a key executive meeting later in the day.

Elsewhere, shares in Vodafone climbed 0.86% amid reports the phone company is in talks with Hutchison Whampoa to combine their networks in Ireland. 

In the U.S., equity markets were closed for the Independence Day holiday.

Also Wednesday, official data showed that retail sales in the euro zone rose by a seasonally adjusted 0.6% in May, beating expectations for a 0.3% gain, but total sales for April were revised down to a 1.4% drop from a previously reported decline of 1%.

Traders are anticipating U.S. initial jobless claims, the ADP non farm employment numbers, Great Britain’s interest rate decision and Germany’s factory orders on Thursday.