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European stocks declined, erasing earlier gains, as European Central Bank President Mario Draghi’s comments disappointed investors seeking more definitive measures to stimulate the region’s economy.
Draghi signaled that the ECB will join forces with governments to buy sovereign bonds. Still, he didn’t give details on how such a program would work, saying that they will be fleshed out in coming weeks.
Bond yields that throw into question the future of the euro are “unacceptable” and “need to be addressed in a fundamental manner,” he also said at a press conference in Frankfurt today after the ECB kept the benchmark interest rate unchanged at 0.75 percent.
The Bank of England maintained its current bond-buying program today as policy makers wait to assess the impact of the latest stimulus and their new lending program to end the recession.
National benchmark indexes fell in 15 of the 18 western European markets today. The U.K.’s FTSE 100 Index slid 0.9 percent, France’s CAC 40 Index declined 2.7 percent and Germany’s DAX Index retreated 2.2 percent.
An index of banking shares was the worst-performing industry group on the Stoxx 600. Santander plunged 6.7 percent to 4.63 euros and Deutsche Bank slid 5.3 percent to 23.21 euros. Credit Agricole SA slumped 8 percent to 3.28 euros.
Veolia plunged 12 percent to 8.15 euros, the biggest drop in a year. First-half results were hurt by writedowns in Italy, the economic slowdown and a “contractual erosion” at Veolia’s water division in France, the Paris-based company said. Veolia plans to sell 5 billion euros of assets and reduce investment by 500 million euros this year and next.
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