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European shares edge lower ahead of ECB, BoE

Published 10/07/2010, 04:41 AM
Updated 10/07/2010, 04:44 AM
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* FTSEurofirst 300 down 0.2 percent

* Miners slip back

* Renault soars after cutting Volvo stake

* For up-to-the-minute market news, click on

By Brian Gorman

LONDON, Oct 7 (Reuters) - European shares edged lower in early trade on Thursday, ahead of interest rate decisions and policy indications from the European Central Bank and Bank of England.

At 0826 GMT, the FTSEurofirst 300 index of top European shares was down 0.2 percent at 1,068.23 points, after rising 1.9 percent in the previous two sessions.

The index is up more than 65 percent from the record low of March, 2009, but has gained barely 2 percent in 2010.

The BoE and the ECB are both expected to say they are keeping interest rates at record low levels of 0.5 and 1 percent respectively.

"We're not expecting the Bank of England to do anything concrete today. The markets have been pushed up on the expectations of QE (quantitative easing), but that's generally U.S. QE. People expect the Fed to do more QE next month," said Philip Isherwood , European equities strategist at Evolution Securities.

The dollar hit a 15-year low against the yen and fell across the board on Thursday on growing speculation that the Federal Reserve may implement more monetary easing as early as next month. The euro rose to its highest since February against the dollar.

RATE DECISIONS

Miners were generally lower, giving up some gains from the previous session, though gold hit another record high and copper remained near recent highs, boosted by the weaker dollar. Kazakhmys and Xstrata fell 3.2 and 0.9 percent respectively.

Antofagasta shed 2.4 percent, with the Chilean copper miner impacted by a downgrade to "sell" from "hold" by Citigroup on valuation grounds.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC40 fell between 0.1 and 0.3 percent.

"With the rate decisions today and the jobs data tomorrow, investors are maybe just taking profits off the table after a strong couple of days. The move lower isn't massive in the context of things," said Joshua Raymond, market strategist at City Index.

Renault soared 7.2 percent after the French carmaker said it sold most of its 21.7 percent stake in Swedish truck maker Volvo , reducing the holding to 6.8 percent. Volvo shares fell 4.4 percent.

Weekly U.S. jobless claims are also due later, coming after weaker-than- expected ADP employment data on Wednesday. "People will still wait for the monthly payroll numbers on Friday," said Isherwood.

British house prices fell 3.6 percent in September, the fastest rate since records began in 1983, said the Halifax.

Housebuilders Barratt Developments and Taylor Wimpey fell 3.8 and 3.1 percent respectively. (Editing by David Holmes)

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