European Shares Fall on Growth Concerns; All Eyes on the ECB

(Bloomberg) -- European shares fell at the open, tracking Asian markets lower, amid mounting economic growth concerns. The focus now turns to the European Central Bank and its possible new round of aid to banks.

The Stoxx Europe 600 Index dropped 0.2 percent, led down by basic resources and the autos sectors. German publishing company Axel Springer SE fell 6 percent after it provided a 2019 revenue outlook that Morgan Stanley described as “tepid.”

The ECB will announce its decision at 1:45 p.m. in Frankfurt with officials poised to cut economic forecasts by enough to justify another round of loans for banks, known as TLTROs, Bloomberg news reported Wednesday citing people with knowledge of the matter.

"The main issue today will be the conditions the ECB sets for TLTROs, although the market has already priced in this new round of help so any surprise could be received negatively,” Alfonso Benito, chief investment officer at Spanish asset manager Dunas Capital, said by phone. “TLTROs are just a way to keep supplying oxygen to banks and it’s something minor. Their business will remain under great pressure until rates go up.”

Economic growth remains as the main concern for investors after the Organization for Economic Cooperation and Development downgraded Wednesday almost every growth forecast for the Group of 20 nations. “The macro environment is worst than what many of us were expecting, but the stock market remains strong -- it’s best to take a cautious view on shares on the medium term,” Benito said.

To contact the reporter on this story: Macarena Munoz in Madrid at mmunoz39@bloomberg.net

To contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, Jon Menon

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