By Tommy Stubbington and Josie Cox
European markets stuck to their recent holding pattern Thursday
while investors awaited the European Central Bank's policy
announcement.
The euro, which has weakened since ECB President Mario Draghi
last month suggested that easing measures could be on their way in
June, was steady against the dollar at $1.3610.
The central bank is widely expected to cut all its main interest
rates at Thursday's meeting, including pushing its deposit rate
into negative territory for the first time. Some analysts also
expect further action such as steps to boost liquidity or a package
of cheap loans to banks.
"For recent euro weakness to extend further after today's
meeting, the ECB will likely now have to meet high investor
expectations and perhaps even hint that more easing is likely later
this year," said Lee Hardman, a currency analyst at Bank of
Tokyo-Mitsubishi UFJ.
Investors will also be looking out for signals from Mr. Draghi
of future steps--particularly the possibility that the ECB could
launch a program of large-scale asset purchases if inflation
continues at its current sluggish pace.
Data earlier in the week showed consumer price growth in the
currency bloc slowed to just 0.5% annually in May.
A survey conducted by Barclays shows that just over 46% of its
clients questioned expect the ECB to cut rates and announce
targeted credit easing.
In equity markets, the Stoxx Europe 600 index was little changed
in early trade.
Outside the euro zone, London's FTSE 100 slipped 0.2%. The Bank
of England also makes its monthly interest rate decision Thursday
and is widely expected to keep policy on hold.
In the U.S., S&P 500 futures were little changed, with
investors eyeing the government's monthly employment report due
Friday, which is expected show nonfarm payroll growth of
210,000.
On Wednesday, data compiled by Automatic Data Processing and
Moody's Analytics showed that 179,000 private-sector jobs were
added in May, falling short of expectations of a 210,000 increase.
Changes in futures don't always accurately predict market moves
after the opening bell.
Back in European equity markets, Smith & Nephew shares
climbed sharply after Medtronic Inc. was reported by Bloomberg to
be considering an offer for the U.K. medical-device maker.
In a further sign of the market for mergers and acquisitions
reviving, German household consumer products maker Henkel AG &
Co. said is would pay EUR940 million ($1.27 billion) in cash for
French company Spotless GroupSAS in a move aimed at strengthening
its position in Western Europe.
According to Dealogic data from this week, the volume of global
consumer-sector M&A stands at $26.6 billion year-to-date,
already marking a robust 89% rise on the same period last year.
Elsewhere, shares in online retailer Asos slumped by more than
40% after issuing a profit warning, saying increased levels of
promotional activity have hit margins. Year-to-date, that marks a
more than 47% tumble in the stock price.
In commodities markets, gold was down 0.1% at $1,243.40 an
ounce, while Brent crude oil was down 0.3% at $108.07 a barrel.
Write to Tommy Stubbington at tommy.stubbington@wsj.com and
Josie Cox at josie.cox@wsj.com