UKX FTSE 100 Index

By Sara Sjolin, MarketWatch

Analysts got confirmation QE will continue through 2017

Europe's main stock gauge closed slightly lower, after gains sparked by European Central Bank President Mario Draghi's remarks failed to stick.

The ECB chief struck a markedly dovish tone, emphasizing downside risks to the inflation outlook and reiterating that the bank's bond buying program can be extended or expanded, if needed.

The Stoxx Europe 600 index finished down less than 0.1% at 362.85. The pan-European benchmark had risen in afternoon action to around 364, after trading as low as 361.66 ahead of the ECB event.

At the first policy-setting meeting this year, the central bank left its key refinancing rate at 0% (http://www.marketwatch.com/story/ecb-leaves-rates-unchanged-draghi-up-next-2017-01-19) and the deposit rate at negative 0.4%, as was widely expected. Policy makers also made no changes to the ECB's 80-billion-euro-a-month bond-buying program.

At a press conference after the rate announcement, Draghi fended off questions (http://www.marketwatch.com/story/ecbs-draghi-dovish-as-he-plays-down-inflation-2017-01-19) about rapidly rising consumer prices in the eurozone. He said there "are no signs yet of a convincing upward trend in underlying inflation."

The ECB has adopted an aggressive easing program and negative deposit rate to try to get inflation back to a target of around 2%.

At its last meeting, the bank said it would extend its quantitative easing program to end in December 2017, rather than in March 2017. However, it reduced its bond buying to EUR60 billion a month from the current EUR80 billion.

"If the outlook becomes less favorable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset purchase program in terms of size and/or duration," the ECB said in its policy statement.

The euro dropped under $1.06 after the comments, but the shared currency was recently buying $1.0633, compared with $1.0630 late Wednesday in New York.

"Why is the ECB leaving the QE taps on while inflation and growth [are] showing signs of picking up? Today we learned why--according to Draghi, the ECB has yet to see any signs of a convincing upward trend in core inflation. It was this that sent the euro lower as traders reacted," said Neil Wilson, senior market analyst at ETX Capital, in a note.

"In other words, don't take the recent data at face value. It could be a blip, and the risks remain to the downside. Sensible, measured and characteristically dovish--as you'd expect from Draghi," he said.

Other indexes: Germany's DAX 30 index closed down less than 0.1% at 11,596.89, while France's CAC 40 index gave up 0.1% to end at 4,841.14.

The U.K.'s FTSE 100 index lost 0.5% to end at 7,208.44. Speaking at the World Economic Forum in Davos, Switzerland, U.K. Prime Minister Theresa May stressed that the U.K. is a "truly global Britain," (http://www.marketwatch.com/story/may-urges-businesses-to-play-by-the-same-rules-that-ordinary-workers-follow-2017-01-19) and that its officials are working to strike trade deals with and beyond Europe.

Movers: Shares of Zodiac Aerospace (ZC.FR) rocketed 23% after French aerospace supplier Safran (SAF.FR) said it would buy the cabin seat manufacturer (http://www.marketwatch.com/story/safran-agrees-to-buy-zodiac-aerospace-2017-01-19-14854639) in a deal that should create the No. 3 aerospace supplier to big plane makers Airbus SE and Boeing Co. Safran shares slipped 0.5%.

Moneysupermarket.com Group PLC (MONY.LN) jumped 8% after the price-comparison website said adjusted full-year operating profit has risen (http://www.marketwatch.com/story/moneysupermarket-to-post-8-rise-in-profit-2017-01-19)8%.

Newly-merged Royal Ahold Delhaize NV (AD.AE) climbed 5.9% after the supermarket operator said a strong performance in the Netherlands (http://www.marketwatch.com/story/royal-ahold-delhaize-sales-helped-by-netherlands-2017-01-19) helped to offset mixed results in the U.S. in the fourth quarter.

Royal Mail PLC (RMG.LN) dropped 6% after the delivery company said sales in the U.K. fell 25% in the nine months to Dec. 25.

(END) Dow Jones Newswires

January 19, 2017 12:23 ET (17:23 GMT)

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