A fall in major healthcare stocks, after drugmaker AstraZeneca tried to play down speculation about a new bid from Pfizer, pegged back European stock markets on Tuesday. Equity investors were also cautious pending any clues on policy from the European Central Bank on Thursday. Few expect any major steps, but most expect ECB policy to loosen eventually, as persistent disinflation and conflict in Ukraine weigh on the euro zone's economy.
-- Traders await ECB decision on Thursday Some traders believed that stock markets had already made their move higher on anticipation of new ECB measures, and therefore had little room to gain any more ground. "We wouldn't chase stocks at these levels," said HED Capital head Richard Edwards.
The pan-European FTSEurofirst 300 index, which has risen nearly 7 percent from its mid-August low, closed down 0.1 percent at 1,375.93 points. A 0.8 percent fall at AstraZeneca weighed on the index. It also contributed to a retreat in the shares of rivals such as Roche and Novartis, while the STOXX Europe 600 Healthcare index weakened 0.2 percent.
AstraZeneca's shares fell after the company's chief executive told Reuters in an interview that everything was "back to normal", in spite of speculation that Pfizer would make a new bid for the British company. Dovish comments last month by ECB President Mario Draghi caused European stock markets to rally, with his remarks leading to bets that the ECB is preparing to pump more liquidity into the economy by buying government or corporate bonds.
Sources at the central bank told Reuters last week that new action on Thursday was unlikely but not impossible, and that the barrier to such QE (quantitative easing) was still "very high". Aurel BGC analyst Gerard Sagnier thought European stock markets could soon rise back to peak levels set earlier in June, when Germany's DAX hit a record high of 10,050.98 points. The DAX rose 0.3 percent to 9,507.02 points on Tuesday.
Others were more cautious. "It could be a case of 'buy the rumour, sell on the fact'. The market has had a good rally off the lows, but it has got room to come back a little bit. Most people are waiting to see what Draghi says before committing new money to the market," said McLaren Securities' managing director Terry Torrison.
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