European Markets Dropped As Strong Euro Weighs On Stocks

(RTTNews) - The European markets got off to a positive start Thursday, but pared their early gains and quickly slipped into negative territory. The losses accelerated in the afternoon, following the weak opening on Wall Street.

The continued strength of the Euro also drove down the value of automakers and other exporters. Gains among bank and mining stocks failed to outweigh the losses caused by the strength of the Euro. Bank stocks climbed after U.S. banks passed their stress tests. Mining stocks benefitted from rising metal prices, including copper.

The Bank of England needs to explore the possibility of raising interest rates if inflation continues to accelerate, the central bank's chief economist Andrew Haldane said Thursday.

"We need to look seriously at the possibility of raising interest rates to keep the lid on those cost of living increases," Haldane, who sits on the BoE's Monetary Policy Committee, told BBC during a visit to Wales.

"For now we are happy with where the rates are, we need to be vigilant for what happens next."

The pan-European Stoxx Europe 600 index weakened by 1.37 percent. The Euro Stoxx 50 index of eurozone bluechip stocks decreased 1.82 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.40 percent.

The DAX of Germany dropped 1.83 percent and the CAC 40 of France fell 1.88 percent. The FTSE 100 of the U.K. declined 0.51 percent and the SMI of Switzerland finished lower by 1.46 percent.

In Frankfurt, Deutsche Bank rose 0.57 percent after a U.S. federal judge dismissed a lawsuit accusing the bank of concealing major deficiencies in its anti-money laundering controls.

Utility RWE lost 3.42 percent and Italy's Enel fell 2.02 percent on expectations that rising interest rates may hurt investment returns through dividends.

In Paris, utility EDF lost 2.22 percent. Nuclear experts at the French nuclear safety authority have said that its Flamanville 3 nuclear reactor being built in northwest France is fit for service despite weak spots in its steel.

Retailer Carrefour slid 1.54 percent after its Brazilian unit unveiled details for a possible $1.7 billion initial public offering next month.

In London, JD Sports plunged 8.80 percent after the company said it is on track to deliver a full-year result in line with market expectations.

Packaging firm DS Smith soared 8.40 percent as it announced the acquisition of an 80 percent stake in U.S. corrugated packaging firm Interstate Resources.

HSBC Holdings jumped 4.24 percent as Morgan Stanley upgraded its rating to 'Overweight' in a research note issued to investors.

Mining giant Rio Tinto rallied 2.44 percent after receiving shareholder approval for the sale of Coal & Allied Industries to China-backed Yancoal Australia.

Hennes & Mauritz gained 2.74 percent in Stockholm after its second quarter profit increased by 10 percent.

Eurozone economic confidence strengthened more than expected in June, survey data from the European Commission showed Thursday. The economic sentiment index rose to 111.1 in June, the highest since August 2007, from 109.2 in May. The expected reading was 109.5.

Germany's consumer price inflation increased unexpectedly in June, preliminary data from Destatis revealed Thursday. Inflation rose to 1.6 percent in June from 1.5 percent in May. Economists had forecast the rate to fall to 1.4 percent.

German consumer confidence is set to improve slightly in July, the market research group GfK said Thursday. The forward-looking consumer sentiment index rose 0.2 points to 10.6 in July. The expected score was 10.5.

UK mortgage approvals increased slightly in May, figures published by the Bank of England showed Thursday. The number of mortgages approved in May totaled 65,202 compared to 65,051 in the previous month. Approvals were forecast to fall to 64,000.

Economic activity in the U.S. grew by more than previously estimated in the first quarter, according to revised data released by the Commerce Department on Thursday. The report said gross domestic product climbed by 1.4 percent in the first quarter compared to the previously reported 1.2 percent increase. Economists had expected GDP growth to be unrevised.

After reporting a modest uptick in first-time claims for U.S. unemployment benefits in the previous week, the Labor Department released a report on Thursday showing another slight increase in initial jobless claims in the week ended June 24th.

The report said initial jobless claims inched up to 244,000, an increase of 2,000 from the previous week's revised level of 242,000. Economists had expected jobless claims to edge down to 240,000 from the 241,000 originally reported for the previous week.