European stocks fall, BoE eyed

Banks led losses across the region in early trade, ahead of a speech from BoE governor Mark Carney.

European stocks fell early on Thursday, following a two-day bounceback in risk assets around the world.

The Stoxx Europe 600 was down 0.9 per cent in early trade after posting its largest two-day gain since February.

The banking sector led losses, down 1.6 per cent. The US banking units of Deutsche Bank AG and Banco Santander SA failed the Federal Reserve’s annual stress tests, while the International Monetary Fund on Wednesday named Deutsche Bank the riskiest financial institution in the world as the potential to be the source of external shocks to the financial system.

In London, the FTSE 100 opened in the red after having outperformed its European peers by a decent 3.58 per cent rally yesterday. UK banks pared gains, with Lloyds dipping 1.60 per cent, Barclays falling 1.49 per cent and RBS giving back 3.44 per cent.

Bank of England Governor Mark Carney will deliver a speech tonight, a week after Britons voted to leave the European Union, the central bank said on Wednesday. The BOE didn’t offer any details on the content of Mr Carney’s speech on Thursday, scheduled for 3pm GMT time in London. It is unusual for the governor and other senior officials to speak at such short notice.

Earlier, stocks in Japan and Shanghai closed little changed, while Hong Kong’s Hang Seng Index added 1.4 per cent. Locally, the S&P ASX 200 rose 1.8 per cent, led by energy and mining shares.

Thursday’s moves followed two days of steep gains on Wall Street and around the world, as stocks rebounded from major losses in the aftermath of the UK’s surprise vote to exit the European Union.

The pound was flat against the dollar at $US1.3436.

In commodities, Brent crude oil fell 0.7 per cent to $US50.95 a barrel after oil prices posted their biggest gain in over two months. Gold was down 0.7 per cent at $US1,317 an ounce.

- Dow Jones newswires