European stocks drop before ECB rate call
European stock markets dropped in morning trades on Thursday as investors awaited an update on the outlook for eurozone interest rates.
Shanghai and Hong Kong closed with sizeable gains awaiting fresh pledges of stimulus from Chinese officials, a day after they announced a measure to boost bank lending.
Oil prices climbed about 1.5 percent after a bigger-than-expected fall in US crude stockpiles. The dollar struggled against main rivals.
"European markets are moderately lower... with traders remaining cautious ahead of this afternoon's ECB meeting," noted Joshua Mahony, chief market analyst at trading group Scope Markets.
"Thus far we have seen the ECB holding steadfast in the face of a contracting economy and falling inflation."
The European Central Bank is expected to stand pat on Thursday following a regular interest-rate meeting and call for patience in the drawn-out battle against high inflation, pushing back against market hopes of rapid cuts to borrowing costs.
Ahead of the outcome, data showed business morale in Germany sank further in January, as the slump in Europe's largest economy showed few signs of passing quickly.
Another record close for the S&P 500 on Wall Street on Wednesday had provided a positive lead for Asian investors.
US data this week will be closely scrutinised, with dealers hoping for a fresh handle on the Federal Reserve's own rate plans.
A recent run of strong economic readings in the world's biggest economy -- and central bank warnings that officials were keen to keep borrowing costs elevated -- have dented expectations for a March reduction.
"Frankly, everything depends on the incoming data now and there are a lot of potentially significant releases over the next few weeks that could swing the odds of a March rate cut in either direction," said Paul Ashworth at Capital Economics research group.
"We still think the Fed will lower rates by 25 basis points at that upcoming meeting."
- Key figures around 1100 GMT -
London - FTSE 100: DOWN 0.2 percent at 7,513.28 points
Paris - CAC 40: DOWN 0.4 percent at 7,427.00
Frankfurt - DAX: DOWN 0.4 percent at 16,826.86
EURO STOXX 50: DOWN 0.3 percent at 4,550.62
Tokyo - Nikkei 225: FLAT at 36,236.47 (close)
Hong Kong - Hang Seng Index: UP 2.0 percent at 16,211.96 (close)
Shanghai - Composite: UP 3.0 percent at 2,906.11 (close)
New York - Dow: DOWN 0.3 percent at 37,806.39 (close)
Euro/dollar: UP at $1.0892 from $1.0883 on Wednesday
Dollar/yen: UP at 147.63 yen from 147.62 yen
Euro/pound: UP at 85.57 pence from 85.56 pence
Pound/dollar: UP at $1.2732 from $1.2717
Brent North Sea Crude: UP 1.4 percent at $81.19 per barrel
West Texas Intermediate: UP 1.6 percent at $76.28 per barrel
burs-bcp/rfj/gil
R.Collins--RTC
