European Markets Pull Back On US-China Trade Concerns, Bank Of England

BRUSSELS/FRANKFURT/PARIS (Alliance News) - The European markets ended Thursday's session firmly in negative territory.

US-China trade concerns continue to have a negative impact in investor sentiment and traders were in a cautious mood ahead of the Bank of England announcement.

US Trade Representative Robert Lighthizer said President Trump has directed him to consider increasing the proposed tariff rate on USD200 billion worth of Chinese goods to 25% from the previously announced 10%.

In response, China reiterated its threat to retaliate, with the Chinese Ministry of Commerce declaring the communist country fully prepared to defend its dignity and the interests of its people.

The Bank of England lifted its key benchmark rate by a quarter point to the highest since 2009 as policymakers were more concerned about above target inflation than Brexit uncertainties.

The Monetary Policy Committee, headed by Governor Mark Carney, unanimously decided to lift the benchmark rate by 25 basis points to 0.75%, the bank said in a statement on Thursday.

Economists did forecast a rate hike, but a unanimous vote came as a surprise. The MPC also voted 9-0 to maintain the quantitative easing at GBP435 billion.

The pan-European Stoxx Europe 600 index weakened by 0.8%. The Euro Stoxx 50 index of eurozone bluechip stocks decreased 1.2%, while the Stoxx Europe 50 index, which includes some major UK companies, lost 1.0%.

The DAX of Germany dropped 1.5% and the CAC of France fell 0.7%. The FTSE 100 of the UK declined 1.0% and the SMI of Switzerland finished lower by 0.2%.

In Frankfurt, BMW fell 0.7% after reporting a drop in second-quarter profit.

Engineering giant Siemens dropped 4.9% after it announced a new company structure under Vision 2020+ to give individual businesses significantly more entrepreneurial freedom.

Dialog Semiconductor sank 3.5%. The manufacturer expects third-quarter gross margin to be broadly in line with second quarter, and fiscal 2018 to be broadly in line with fiscal 2017.

Luxury fashion brand Hugo Boss weakened by 2.8% after reporting a decline in second-quarter net income.

In Paris, Societe Generale declined 2.3% despite posting higher second-quarter profit on strong net banking income.

Asset manager Amundi soared 5.4% on reporting a 14% rise in the second quarter net profit.

Insurer AXA rose 1.0% after its first-half results matched estimates. In London, Inmarsat tumbled 7.5%. The satellite operator cut dividend after reporting a 20% fall in second-quarter profit.

Rolls-Royce Holdings rallied 7.2%. The engine maker sounded upbeat about 2018 profit outlook after reporting a pretax loss in the first half.

Barclays lost 2.7% and Aviva shed 2.7% after declaring their half-year results.

Eurozone producer prices climbed at a faster pace on energy prices in June, figures from Eurostat showed Thursday. Producer prices advanced 3.6% annually in June, faster than the 3% rise in May. This was also faster than the expected 3.5%.

The UK construction sector logged a stronger growth in July underpinned by the fastest increase in residential work for just over two-and-a-half years, survey data from IHS Markit showed Thursday. The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index rose unexpectedly to 55.8 in July from 53.1 in the previous month. The score was forecast to fall to 52.8.

A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report on Thursday showing first-time claims for US unemployment benefits edged slightly higher in the week ended July 28.

The report said initial jobless claims inched up to 218,000, an uptick of 1,000 from the previous week's unrevised level of 217,000. Economists had expected jobless claims to rise to 220,000.

A report released by the Commerce Department on Thursday showed new orders for US manufactured goods increased in line with economist estimates in the month of June. The report said factory orders climbed by 0.7% in June after rising by an unrevised 0.4% in May. The continued increase in orders matched expectations.