By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets turned lower on
Wednesday after the Bank of England undermined hopes of further
quantitative easing in minutes from its latest meeting.
The Stoxx Europe 600 index dropped 0.4% to 294.09, after trading
in positive territory earlier in the day.
Among notable movers in the index, shares of BHP Billiton PLC
(BHP) picked up 1.5% after the mining giant said iron-ore
production hit a record high in its past financial year.
Semiconductor-equipment maker ASML Holding NV (ASMLD) rose 1.8%
after raising its full-year sales outlook.
Shares of French cosmetics group L'Oréal SA fell 3% after the
firm reported a slowdown in market growth in the first half of the
year.
More broadly, the pan-European benchmark shaved off earlier
gains after the Bank of England said all members at the July
meeting voted in favor of keeping its asset purchases unchanged at
375 billion pounds ($570 billion). The votes marked a shift from
recent meetings when three out of the nine members preferred to
increase the easing program by GBP25 billion to GBP400 billion.
"We see this set of minutes as consistent with our call that the
policy emphasis will shift: in the monetary policy space, that will
mean further emphasis on forward guidance. It will be important to
some members to keep asset purchases live as a policy tool, but we
do not expect further purchases, barring a significant economic
slowdown," said Jens Larsen, chief European economist at RBC
Capital Markets, in a note.
The FTSE 100 index dropped 0.5% to 6,526.27. The pound (GBPUSD)
rose to $1.5203 from $1.5115 on Tuesday.
Bernanke in the limelight
The U.S. central bank was also in the spotlight, ahead of
Federal Reserve Chairman Ben Bernanke's semiannual testimony before
Congress at 10 a.m. Eastern time. In a new approach to these
appearances, his prepared remarks will come out at 8:30 a.m.
Eastern. Read: Four questions for Bernanke -- that he may or may
not answer -- as he takes to Capitol Hill
Since the chairman in late May started talking about the
prospect of tapering the central bank's asset purchases, markets
have been closely scrutinizing hints of when a reduction may set
in.
"Our guess is that he will try to pull off the trick of
continuing to prepare the groundwork for tapering, but try to give
bond markets something to help them fight off the pressure of
higher yields," analysts at Deutsche Bank said in a note.
U.S. stock futures pointed to a lower open on Wall Street.
Back in Europe, France's CAC 40 index fell 0.5% to 3,833.59 and
Germany's DAX 30 index traded 0.5% lower at 8,159.25.
Shares of Unilever PLC (UL) lost 2.1% in London after Credit
Suisse cut the consumer-goods firm to underperform from
neutral.
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