The European Central Bank chief is expected to outline plans to offer fresh assistance to banks (Daniel ROLAND)

London (AFP) – European stock markets delivered a mixed response on Thursday to an update from European Central Bank, as it became the latest central bank to adopt a dovish stance faced with fears of a global economic slowdown and the US-China trade war.

Frankfurt’s DAX 30 index fell from earlier gains after the ECB announced it would hold key interest rates at historic lows until at least the middle of next year.

Fawad Razaqzada at Forex.com said the market’s initial response “was that the central bank was not dovish enough and so the euro spiked higher and the DAX lower”.

European markets were also focused on the auto sector as the collapse of Fiat Chrysler’s proposed merger with Renault sent shares in the French car giant tumbling.

Wall Street meanwhile opened slightly higher on Thursday, after mixed economic data and continuing uncertainty over Washington’s tit-for-tat tariff battle with Beijing.

New data showed that the US trade deficit shrank in April even as exports saw the biggest dive in more than four years, pointing to weakening economic momentum.

It was also revealed on Thursday that US automakers are slashing jobs at the fastest pace since the global financial crisis a decade ago.

And US President Donald Trump said he would make a decision about whether to impose new tariffs on Chinese goods after a G20 meeting in Japan at the end of the month.

– ‘Another downbeat assessment’ –

At its regular monthly policy meeting, the ECB predicted higher growth and inflation for the eurozone this year, but lowered both forecasts for 2020.

Central banks around the world are adopting a more dovish — or more expansive — monetary policy stance amid a slowdown in the global economy.

“Another day, another downbeat assessment of the global economy that has been provided from a leading central bank,” Marianna Sofocleous at FXTM said of the ECB update.

India’s central bank on Thursday delivered a third consecutive interest rate cut, following Australia’s central bank which cut rates earlier in the week. 

On the corporate front, shares in French carmaker Renault slumped by 6.6 percent to 52.45 euros in Paris afternoon deals.

Fiat Chrysler gained 0.2 percent to 11.68 euros on the Milan stock market, reversing an initial slide after the Italian-American peer scrapped the blockbuster merger proposal.

Fiat Chrysler blamed the move on political objections in Paris, sparking a war of words with French officials, only a week after proposing the deal.

Asian stock markets made modest gains Thursday as trade tensions continued to weigh on investors’ minds, with some cautiously hoping that the United States and Mexico will strike a compromise on tariffs.

Trump earlier said that some progress — but not enough — had been made in Wednesday’s talks with Mexico on averting the tariffs he intends to impose next week unless the flow of undocumented migrants into the US is stopped.

Coming on the heels of the US-China trade war, Trump’s threats against Mexico have intensified fears for the global economy, hurting oil prices and lowering overall growth forecasts.

Crude prices made a tepid recovery Thursday, following the previous day’s sharp decline caused also by high US supplies and weak demand growth.

– Key figures around 1345 GMT –

London – FTSE 100: UP 0.7 percent at 7,269.32 points

Frankfurt – DAX 30: DOWN 0.1 percent at 11,976.18

Paris – CAC 40: UP 0.2 percent at 5,301.92

Milan – FTSE MIB – UP 0.4 percent at 20,232.93

EURO STOXX 50: UP 0.3 percent at 3,350.18

New York – Dow: UP 0.2 percent at 25,582.00

Tokyo – Nikkei 225: FLAT at 20,774.04 (close)

Hong Kong – Hang Seng: UP 0.3 percent at 26,965.28 (close)

Shanghai – Composite: DOWN 1.2 percent at 2,827.80 (close)

Euro/dollar: UP at $1.1254 from $1.1225 at 2100 GMT Wednesday 

Pound/dollar: UP at $1.2701 from $1.2686 

Dollar/yen: DOWN at 108.29 yen from 108.43 yen 

Oil – Brent Crude: UP 18 cents at $60.81 per barrel

Oil – West Texas Intermediate: UP eight cents at $51.76 per barrel

burs-dl/spm

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.