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LONDON (Alliance News) - Stock indices across the UK and Europe are mixed Thursday, showing little reaction to Chinese stimulus measures, while the pound has fallen in the wake of weaker-than-expected UK service sector data, and the euro is flat as a pancake ahead of the European Central Bank announcement still to come.
Global stocks have so far shown little reaction to the widely expected Chinese stimulus package, announced by the Chinese government on Wednesday, and Asian markets have closed mixed, with the Shanghai Composite index down 0.7%, the Nikkei up 0.8%, and the Hang Seng up 0.2%.
China on Thursday announced reforms in the railway sector, an urban redevelopment programme, and tax breaks for small companies, all designed to support the country's 7.5% growth target. The People's Bank of China has reportedly said Thursday that it sees current Chinese growth "within a reasonable range" and that it plans to maintain liquidity levels.
By mid-morning Thursday the FTSE 100 is up 0.1% at 6,665.99, the FTSE 250 is down 0.2% at 16,389.34, and the AIM All-share is up 0.1% at 852.04.
A similar mixed and muted picture within UK equities sees the French CAC 40 just fractionally higher and the German DAX 30 fractionally lower.
The pound has slipped to a weekly low against the dollar, bottoming at USD1.6600, following a weaker-than-expected reading of the UK service industry.
The UK Service PMI from Markit dropped to 57.6 in March from 58.2 in February. Economists had expected expansion to slow only marginally to 58.1.
Within Europe the Markit services PMI data has been broadly softer than expected, with the eurozone wide number slipping to 52.2 in March from 52.6 in February, missing economists expectations of 52.4.
The Composite Markit PMI, which covers the services and manufacturing sectors for the whole of the eurozone, slipped to 53.1 in March from 53.3 in February, coming in fractionally lower than the 53.2 expectation.
Italy produced a disappointing reading that showed the service sector slipped back into contraction in March after briefly expanding in February, with a PMI reading on 49.5, down from 52.9, against a forecast of 52.0.
Eurozone retail sales continued to grow at 0.8% year-on-year in February, unchanged from January as expected. On a monthly basis, retail sales grew by 0.4% in February, down from the 1.0% growth in January but beating the expectation for a contraction of 0.6%.
The euro remains almost unchanged against the dollar in the run up the the ECB rate decision at 1145 GMT, currently trading at USD1.3767.
Within UK equity sectors, the General Retail sector is outperforming, led higher by Dunelm Group, which is up 2.5% after reporting 5% growth in its third quarter like-for-like sales growth. The sales growth is well in excess of consensus forecasts, although analysts suggest the sales growth is largely offset by groups increased investment spending, meaning there is little room for forecast upgrades.
Fellow home improvement retailer Kingfisher also is higher Thursday after announcing that it is in negotiations to acquire French retail chain Mr Bricolage. Kingfisher shares are up 2.2%.
Also within the retail sector, Sports Direct shares continue to trade well, up 0.3% currently, after the group seems to have saved itself GBP72.5 million by shareholders rejecting a share bonus package for founder Mike Ashley.
Tullow Oil is the stand out blue-chip gainer Thursday, up 4.7% and leading the FTSE 100 higher after receiving an upgrade to Buy from Neutral by UBS, with analysts saying the investment risk-reward ratio is now skewed to the upside.
Vodafone is providing a significant drag on the FTSE 100. Shares in the mobile giant are down 0.6% as investors react negatively to the news that it plans to open 150 new stores in the UK as part of its plan to invest GBP1 billion in its UK network over the current year.
On its stock market debut, Just Eat shares opened at 285 pence, almost 10% higher than the IPO price of 260p. By late morning the shares have settled at 272p, still up 4.6%.
Still to come Thursday, all eyes will be on the ECB policy announcement at 1145 GMT, and Mario Draghi's press conference that follows at 1230 GMT.
Also at 1230 GMT, weekly US initial jobless claims will be released, which are expected to have risen slightly to 317,000 from 311,000 in the previous week.
The US Markit services PMI will be released at 1258 GMT, followed by the government non-manufacturing PMI at 1400 GMT. Economists expect the non-manufacturing number to rise strongly to 53.5 in March from 51.6 in february.
While Wednesday's ADP jobs report has already set an encouraging precedent for Friday's important non-farm employment report, "this afternoon investors will be looking closely at the employment component of the non-manufacturing US ISM report for further clues as to how the US labour market is developing," says Rabobank senior strategist Jane Foley.
US stocks have posted solid gains every day so far this week, with the S&P 500 pushing into uncharted new highs. Ahead of Thursday's market open, US futures indicate another marginally higher open across the major markets at the opening bell.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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