FILE PHOTO: A woman, wearing a protective mask walks past the head quarter of the European Central Bank (ECB) during sunset in Frankfurt, Germany, April 29, 2020, as the spread of the coronavirus disease (COVID-19) continues. REUTERS/Kai Pfaffenbach/File Photo
(Reuters) – A European stock market rally paused on Thursday, with investors focussing on a European Central Bank meeting where policymakers are expected to provide more aid for the battered euro zone economy.
The pan-European STOXX 600 index slipped 0.5% by 0708 GMT, but held near its early March highs, while eurozone stocks .STOXXE were down 0.6%.
Automakers .SXAP and banks .SX7P led the declines, falling 2.5% and 1.8%, respectively.
Equity markets have bounced strongly this week, with Wall Street’s tech-heavy Nasdaq .IXIC nearing record levels as signs of recovery from a coronavirus-forced recession, optimism over a COVID-19 vaccine and hopes of more stimulus boosted risk appetite.
Investors expect the ECB to upsize bond purchases by 500 billion euros ($560.25 billion), but the only question is whether it will act on Thursday or hold out until July as a deal on European Union-wide fiscal support strengthens the case for patience.
Meanwhile, Germany’s coalition parties agreed a 130-billion-euros stimulus package to speed up a recovery from the coronavirus on Wednesday, but shares in Daimler (DAIGn.DE), BMW (BMWG.DE) and Volkswagen (VOWG_p.DE) slid between 2.6% and 4.5% as the packaged favoured electric cars.
French spirits company Remy Cointreau (RCOP.PA) jumped 6.9% after it predicted a strong recovery in the second half, driven by China and the United States.
($1 = 0.8925 euros)
Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur