By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets declined on
Friday after a string of disappointing corporate updates, falling
from a six-year high reached the prior day when European Central
Bank President Mario Draghi hinted at a rate cut next month.
The Stoxx Europe 600 index fell 0.3% to close at 338.54, after
ending with a 1.1% gain on Thursday. For the week, the index ticked
up 0.2%.
Pulling the benchmark lower, shares of Telefonica SA (TEF) lost
2.6% after the Spanish telecom firm reported a drop in
first-quarter profit that also missed market expectations.
Petrofac Ltd. slumped 15% in London after the oil-services firm
issued a profit warning and said it expects profit to fall in
2014.
Shares of ArcelorMittal SA dropped 3.4% after the world's
largest steelmaker reported a loss for the first quarter.
On a more upbeat note, shares of Vestas Wind Systems AS rallied
7.6%. The wind-turbine maker said it swung to a profit in the first
quarter, partly due to a 17% increase in revenue amid stronger
demand.
The broader losses in Europe came after a solid session on
Thursday, when Draghi said the ECB's Governing Council would be
"comfortable" with loosening policy at its June meeting, with the
caveat that policy makers want to see the June update of staff
economic forecasts.
The comment came after the ECB kept policy on hold at its
meeting on Thursday, ignoring European and international calls for
action to fight off low inflation and weaken the strong euro. The
pledge for more easing sent the shared currency lower Thursday
afternoon and it kept falling on Friday. The euro (EURUSD) traded
at $1.3768, down from $1.3851 late Thursday.
"ECB President Draghi gave a fine burlesque performance
yesterday -- he hinted broadly, he winked saucily, and he basically
said that the ECB is going to ease policy without actually saying
the ECB will ease policy," UBS economist Paul Donovan said in a
note.
Among country-specific indexes on Friday, Germany's DAX 30 gave
up 0.3% to 9,581.45 after a set of disappointing trade data. The
March numbers showed exports declined, while the country's trade
surplus was lower than expected, adding to a series of weaker
economic indicators for the month. For the month, the German
benchmark ended 0.3% higher.
Portugal's PSI 20 index dropped 1.8% to 7,306.36, even amid
positive comments from Standard & Poor's Ratings Services. The
ratings company lifted its outlook on Portugal to stable from
negative, saying the country's economic and budgetary performance
has outpaced its expectations.
France's CAC 40 index fell 0.7% to 4,477.28, trimming its weekly
advance to 0.4%.
The U.K.'s FTSE 100 index gave up 0.4% to 6,814.57, ending the
week 0.1% lower. Investors in London largely ignored strong factory
data, showing U.K. factory output between January and March rose at
the fastest quarterly pace in almost 15 years.
The crisis in Ukraine also kept investors on edge on Friday,
ahead of an independence vote for the country's east scheduled for
Sunday. A main pro-Russian separatist group in eastern Ukraine said
on Thursday it would go ahead with the secession referendum for the
Donetsk region, defying an appeal from Russian President Vladimir
Putin to delay the vote in an effort to calm the conflict in the
region.
Markets in Russia were closed on Friday for a national
holiday.
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