European shares inch lower ahead of ECB meeting, carmakers drag

Reuters

Published Jun 04, 2020 03:31AM ET

(Reuters) - A European stock market rally paused on Thursday, with investors focussing on a European Central Bank meeting where policymakers are expected to provide more aid for the battered euro zone economy.

The pan-European STOXX 600 index (STOXX) slipped 0.5% by 0708 GMT, but held near its early March highs, while eurozone stocks (STOXXE) were down 0.6%.

Automakers (SXAP) and banks (SX7P) led the declines, falling 2.5% and 1.8%, respectively.

Equity markets have bounced strongly this week, with Wall Street's tech-heavy Nasdaq (IXIC) nearing record levels as signs of recovery from a coronavirus-forced recession, optimism over a COVID-19 vaccine and hopes of more stimulus boosted risk appetite.

Investors expect the ECB to upsize bond purchases by 500 billion euros ($560.25 billion), but the only question is whether it will act on Thursday or hold out until July as a deal on European Union-wide fiscal support strengthens the case for patience.

Meanwhile, Germany's coalition parties agreed a 130-billion-euros stimulus package to speed up a recovery from the coronavirus on Wednesday, but shares in Daimler (DE:DAIGn), BMW (DE:BMWG) and Volkswagen (DE:VOWG_p) slid between 2.6% and 4.5% as the packaged favoured electric cars.

French spirits company Remy Cointreau (PA:RCOP) jumped 6.9% after it predicted a strong recovery in the second half, driven by China and the United States.