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European stocks edge lower at open

Monday, August 20 08:28:04

European stocks inched lower early today, halting their sharp rally started in late July, although the losses were limited by growing expectation of bold action from the European Central Bank to lower the borrowing costs of Spain and Italy. At 0707 GMT, the FTSEurofirst 300 index of top European shares was down 0.06 percent at 1,109.69 points, taking a breather after hitting a 13-month high on Friday. Basic Resources stocks led sectoral fallers in early deals, down 0.7 percent, weighed by weaker base metals prices. Euro zone banks, meanwhile, were up 0.5 percent.

A German magazine reported over the weekend that the ECB is considering setting interest rate thresholds for purchases of struggling euro zone country's bonds, a move that would discourage speculators from pushing yields above the level set by the euro zone's central bank. "The prospect of the ECB stepping in is removing most of the systemic risks, so stock pickers are back," a Paris-based equity and ETF sales trader said.

"But that said, the gains over the past few weeks are substantial, and we could go sideways until the ECB finally announces its plan." ( C) Reuters