EUROPE MARKETS: European Stocks Wobble After Central-bank Meetings

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets struggled for direction on Thursday after the European Central Bank and the Bank of England left monetary policy unchanged as expected.

The Stoxx Europe 600 index slipped 0.1% to 316.99, putting it on track for the lowest close since October.

Shares of Metro AG fell 4% after Morgan Stanley cut the German retailer to equal weight from overweight as the share price breached the bank's price target earlier in the week and the analysts "struggle to identify any near-term catalysts."

Sydbank AS lost 4.9% after the Danish bank said it will book impairment charges of around 850 million Danish kroner ($155 million) in the fourth quarter.

Drax Group PLC rose 2.9% after J.P. Morgan Cazenove lifted the utility firm to overweight from neutral.

The U.K.'s FTSE 100 index was little changed around 6,510.73.

France's CAC 40 index slipped 0.1% to 4,145.12, while Germany's DAX 30 index gained 0.1% to 9,147.01.

Investors digested the latest interest-rate decisions from two of Europe's biggest central banks. The ECB left its key lending rate at a record low of 0.25% and made no changes to other official rates.

The central bank last month cut its lending rate by 25 basis points in an effort to boost growth and stave off low inflation. Since then, market participants have speculated whether the central bank will launch unconventional easing measures such as quantitative easing or negative deposit rates to further stimulate the euro-zone economy and investors hope for more clues at ECB President Mario Draghi's news conference at 1:30 p.m. London time or 8:30 a.m. Eastern.

"Based on public commentary, it seems the ECB council is not wholly convinced that last month's refi rate cut is sufficient to counter the risk of 'prolonged low inflation,'" analysts at Deutsche Bank wrote in a note. "The mixed data flow creates some leeway for the ECB to stall a decision, await new data and make a more informed decision on the state of the recovery," they added.

The Bank of England also offered no surprises at its December policy meeting, leaving the size of its bond-buying program unchanged and holding its lending rate at a record low of 0.5%, where it has stood since March 2009. The central bank's monetary policy committee left its asset purchases, the centerpiece of its quantitative-easing strategy, at 375 billion pounds ($614 billion).

Also on Thursday, the U.K. Chancellor of the Exchequer George Osborne delivered his Autumn Statement on the economy to members of parliament, including the latest forecast from the Office for Budget Responsibility. The OBR more than doubled its growth forecast for the U.K. for 2013 to 1.4% from an earlier forecast of 0.6% and raised the outlook for 2014 to 2.4% from 1.8%.

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