European Equity Benchmarks Close Lower


The broad-based major European indices closed lower in Thursday’s trading session, as falling mining stocks and pharmaceuticals outweighed rising banks and automotive companies.

In economic news, the U.K.’s High Court ruled that its parliament must vote on whether the country can begin the process of leaving the European Union. This means that U.K. Prime Minister Theresa May alone can’t initiate Article 50 of the Lisbon Treaty, which begins the formal exit negotiations with the E.U. The government is appealing, with another hearing expected in December.

The ruling sent the pound sharply higher in trading, rising 1.22% against the dollar to $1.24520.

Meanwhile, the Bank of England maintained interest rates at 0.25%, and raised its growth and inflation forecasts for 2017.

“Largely as a result of the depreciation of sterling, CPI inflation is expected to be higher throughout the three-year forecast period than in the Committee’s August projections,” said the BOE.

Meanwhile gas and diesel prices rose in October to its highest level since July 2015, according to U.K.-based motoring body RAC. Average gas prices rose 4.4 pence to 116.7 pence per liter, and average diesel prices rose 5.2 pence to 118.7 pence per liter. The RAC attributed the higher prices to rising crude oil prices, as well as the devaluation of the pound after June’s Brexit vote.

Also in the U.K., the service sector has been growing, according to the most recent Purchasing Managers Index survey data from IHS Markit and CIPS. The rate of growth of total business activity accelerated to the fastest since January, as did new business expansion.

“The sector continued to generate more jobs, albeit at a weaker rate than the average seen over the past three years,” the report said. “Latest data also revealed a marked build up of inflationary pressures in the sector, linked to the weak pound.”

The unemployment rate in the euro area (EA19) was 10% in September 2016, stable compared to August 2016, and down from 10.6% in September of 2015, according to Eurostat, the statistical office of the European Union. It is the lowest rate recorded in the euro area since June 2011. The EU28 unemployment rate was 8.5% in September 2016, stable compared to August 2016 and down from 9.2% in September 2015, marking the lowest rate recorded in the EU28 since February 2009.

In equities, mining stocks weighed down the FTSE in London as Randgold Resources, Fresnillo, and Anglo American shed 6.3%, 4.3%, and 2.7% respectively. Pharmaceutical firms GlaxoSmithKline and AstraZeneca also burdened the market, falling 3.3% and 2% each.

In Frankfurt, footwear and apparel company Adidas led the DAX lower, falling 6.3%, followed by exchange operator Deutsche Boerse, which lost 1.4%. Meanwhile, gas and engineering company Linde, and chemical company BASF dropped 1.2% and 1.1% respectively.

And on the Paris bourse, environmental management services company Veolia Environnement fell 6.3%, chemicals and advanced materials company Solvay shed 3.3% and construction and engineering firm Vinci fell 1.6%.