Europe retreats as BoE forecast hits London stocks

European shares dipped on Thursday as forecasts of a slower post-pandemic economic rebound in the UK hit London stock markets, while disappointing quarterly updates from Glencore and AXA weighed on broader sentiment.

The pan-European STOXX 600 index slipped 0.3pc, with London's FTSE 100 falling 1.4pc.

After surging in the previous session on the back of rising commodity prices, Europe's mining index fell 1.7pc after Glencore scrapped dividend to focus on lowering debt as the COVID-19 pandemic resulted in a $3.2 billion charge.

Shares in BP, Royal Dutch Shell and Total also fell nearly 2pc after strong gains on Tuesday.

The more internationally focussed UK stocks took a hit as sterling rose after the Bank of England kept rates unchanged and warned of possible risks from taking interest rates below zero.

"We already know from the experience of Japan and Europe the damage negative rates does to the banking system, ... and (they) could weaken the UK financial sector even further, thus destabilising the economy even more," said Michael Hewson, market analyst at CMC Markets UK.

French insurer AXA fell 3.4pc after it dropped its 2020 earnings target and said it would not make additional payouts to shareholders in the fourth quarter.

Of the 65pc of the STOXX 600 companies that have reported results so far, nearly 60pc have topped dramatically lowered estimates, according to Refinitiv data. In a typical quarter, 50pc beat estimates.

On the bright side, Adidas gained 3.1pc as it forecast a rebound in profits in the third quarter and Lufthansa jumped 3.2pc even as it said it does not expect air travel demand to return to pre-crisis levels before 2024.

The German DAX got a boost from engineering group Siemens, which posted better-than-expected industrial profit for its third quarter.

Meanwhile, data showed orders for German-made goods rose sharply in June in the latest sign that Europe's largest economy is starting to shrug off the effects of months of lockdown, but volumes were still far below pre-pandemic levels.