European shares drop on Mideast worries; ECB, BoE in focus

By Twesha Dikshit

April 30 (Reuters) – European shares edged lower on Thursday while oil prices climbed, following a report that the U.S. was considering fresh military action against Iran, while investors ​braced for decisions from the European Central Bank and the ‌Bank of England.

The pan-European STOXX 600 eased 0.2%, as of 0836 GMT, on track for monthly losses. Regional bourses mirrored the move, with Germany’s DAX and France’s CAC 40 index down 0.2% and 1.2%, respectively.

Data in Spain showed the country’s ‌economic ​growth eased to 0.6% in the first quarter.

Markets ⁠await policy decisions from ⁠the ECB and BoE, due later in the day, after the U.S. Federal Reserve’s hawkish tone sent Treasury yields spiking and weighed on global bonds.

“When you look at the scenarios that the ECB ​published after the last meeting and if you look at where we are currently trading in energy markets, the market is now ⁠basically trading closer to the ECB’s adverse ⁠scenario,” said Elwin de Groot, head of macro strategy ​at Rabobank.

“In that adverse scenario, it is also more likely that the ​ECB would have to take some form of action in ‌the short to medium term.”

Both central banks are widely expected to keep rates on hold, with the ECB likely to signal a rate hike as soon as June to combat energy-driven inflationary pressures.

Amid earnings driven ⁠moves, financials weighed on the index, with the banking index losing 1.1%. BNP Paribas fell 4.6% after its first-quarter results showed a revenue slip in ⁠investment banking.

Societe Generale ‌dropped 5.7% after quarterly results showed a slide ⁠in trading revenue.

Universal Music Group tumbled 7.1% after reporting ​lower ‌first-quarter revenue due to a weaker dollar and said ​it would ⁠sell half of its equity stake in Spotify. The media index fell 2.4%.

Luxury stocks were also weaker, down 1.1%. LVMH and Hermes slipped about 1.5% each.

Rolls-Royce jumped 6.2% after the British engineering company said it was sticking to its profit guidance.

(Reporting by Twesha Dikshit; Editing by Sherry Jacob-Phillips ​and Ronojoy Mazumdar)