European stocks ended lower on Thursday, as a new earthquake and a tsunami alert in north-eastern Japan sparked a late-session bout of profit taking, halting the market's brisk three-week rally. The FTSEurofirst 300 index of top European shares closed 0.3 percent lower at 1,144.18 points, after rising to as much as 1,153.60 points in afternoon session. The index failed to stay above its 50-day moving average and ended just below the key support level, sending a bearish signal.
"The news broke the session's upside momentum, and with no detail yet on the extent of the damage, people used it as an excuse to take a bit of profit," said Lionel Jardin, head of institutional sales at Global Equities in Paris. The earthquake of magnitude 7.4 shook the northeast of Japan and a tsunami warning was issued for the coast, already devastated by last month's massive quake and the tsunami that crippled a nuclear power plant.
Luxury stocks, still reeling from the first quake due to their strong exposure to Japanese consumers, took another beating on Thursday, with LVMH down 1.8 percent and Richemont down 1.9 percent. So far this year the stocks are down 9.1 percent and 4.4 percent respectively. Shares in Portugal bucked the trend, with the country's PSI 20 index adding 1.2 percent after Lisbon's decision to seek a bailout as well as Spain's relatively successful bond auction helped ease fears that Portugal's debt woes would spread to other countries in the region.
Spain's IBEX 35 index, already outperforming all Europe's indexes in 2011 with a 10 percent rise, held steady on Thursday. As expected, the European Central Bank raised interest rates for the first time since the 2008 financial crisis on Thursday, but the bank's president Jean-Claude Trichet said the ECB had not decided if the hike was the first in a series. Equity investors welcomed the ECB decision, which was not seen as the start of an aggressive tightening cycle.