European stocks extend losses, central bank hopes remain; DAX down 0.59%

Investing.com - European stocks pushed lower on Wednesday, as weak earnings reports continued to weigh, although expectations that global central banks may implement further measures to stimulate growth seemed likely to limit losses.

During European afternoon trade, the EURO STOXX 50 dropped 0.71%, France’s CAC 40 declined 0.71%, while Germany’s DAX 30 retreated 0.59%.

Markets eyed the ECB amid expectations the bank will soon take steps to help lower Spanish and Italian borrowing costs, after bank head Mario Draghi indicated last week that the ECB may restart its bond buying program.

The ECB said action would be conditional on euro zone governments experiencing difficulty on bond markets activating the bloc’s bailout funds to purchase government bonds and accepting strict conditions and supervision.

Meanwhile, a Federal Reserve official on Tuesday kept alive hopes for central bank intervention by saying the Fed should launch an aggressive bond-buying program to aid the economy until unemployment begins to fall.

Financial stocks remained mostly lower, as shares in France’s BNP Paribas dropped 0.92%, while German lender Deutsche Bank plunged 1.40% and Dutch bank ING Group dove 1.79%.

Earlier in the day, ING Group reporting second-quarter net income of EUR1.17 billion, missing analyst estimates of EUR1.26 billion.

Elsewhere, Swisscom tumbled 1.05% after Switzerland’s largest phone company said second-quarter net income declined to CHF468 million from CHF485 million a year earlier.

In addition, Morgan Stanley downgraded the shares to underweight from equal weight.

Also in earnings news, Kloeckner & Co, Europe’s largest independent steel trader, retreated 0.87% after reporting its fourth consecutive quarterly loss and increasing job cuts, as the euro zone’s debt crisis weakened demand.

In London, FTSE 100 declined 0.56%, after the Bank of England’s quarterly inflation report was less dovish than expected.

Standard Chartered surged 7.49%, extending earlier gains, despite reports the bank might be asked to pay as much as USD700 million to resolve money laundering allegations filed by New York’s banking superintendent.
The U.K. lender is accused of scheming with the Iranian government to launder billions of dollars to potentially support terrorist activities.

Other financial stocks were mixed. Shares in the Royal Bank of Scotland eased up 0.07% and HSBC Holdings dropped 0.38%, while Barclays and Lloyds Banking declined 1.33% and 1.52% respectively.

Meanwhile, mining giants Rio Tinto and BHP Billiton turned higher, with shares advancing 2.78% and 0.31%, while copper producer Xstrata rose 0.54%.

In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a 0.22% fall, S&P 500 futures signaled a 0.24% decline, while the Nasdaq 100 futures indicated a 0.07% loss.

Also Wednesday, official data showed that German industrial production fell 0.9% in June, more than forecasts for a decline 0.8%, following an upwardly revised 1.7% gain in May.

Later in the day, the U.S. was to release preliminary data on nonfarm productivity, followed by a government report on crude oil inventories.