(MENAFN- AFP) Europe's main stock markets diverged on Thursday in nervous trading, with investors on tenterhooks before an important policy decision by the ECB in Frankfurt.
All eyes are on the European Central Bank, and its president Mario Draghi, to see what action will be taken to prevent the 18-country eurozone from slipping into deflation, dealers said.
In late morning deals, London's benchmark FTSE 100 index added 0.12 percent to 6,882 points, compared with Wednesday's closing level, boosted by news of a major disposal by financial services group Standard Life.
On the downside, Frankfurt's DAX 30 index fell 0.61 percent to 9,567.84 points and the Paris CAC 40 reversed 0.25 percent to 4,410.82.
"The key economic release today is arguably the ECB's decision on whether to serve up some meaningful stimulus measures in an attempt to shore up the ailing eurozone economies," said Valutrades analyst Joao Monteiro.
"Markets are already pricing this in so failure to deliver could send shockwaves through equities globally."
- ECB open to QE -
Speculation is rife the ECB will unveil plans for quantitative easing, or QE stimulus, at the regular monthly meeting of its policy-setting body, even if it will not actually launch such a programme just yet.
The ECB will announce the outcome of its monetary policy meeting at 1145 GMT, shortly after the BoE's decision at 1100 GMT.
"In the hours before the ECB announcement, most equity markets are on the back foot, with Germany and France both shedding some of the gains seen yesterday," said IG analyst Chris Beauchamp.
"Mario Draghi ... needs to provide something to markets to avoid a lingering sense of disappointment, be that actual QE - or just hints that QE is on its way."
QE is a radical policy - already used by other central banks such as the US Federal Reserve and the Bank of England - of buying securities on a big scale to inject cash into the economy.
The ECB has already cut its key interest rates to record lows and made huge volumes of ultra-cheap cash available to banks in a bid to kick-start lending.
Pressure increased for more ECB action after eurozone inflation slowed to a paltry 0.3 percent in August from 0.4 percent the previous month. That is far below its target of just under 2.0 percent.
Meanwhile, the Bank of England is widely expected to maintain its record-low interest rate at 0.50 percent, where it has stood since March 2009, and refrain also from altering its QE purchases.
- Standard Life shares surge -
In Paris, France was able to borrow at a new record low rate when it issued 10-year bonds. The country raised 4.297 billion euros ($5.7 billion) at 1.32 percent, down from the last record low rate on July 3 of 1.77 percent.
In company news, the top gainer in London was Standard Life after agreeing to sell its Canadian activities to Manulife of Canada for £2.2 billion ($3.6 billion, 2.8 billion euros).
Shares rallied as Standard Life added it would return £1.75 billion of capital to shareholders, or 73 pence per share, following completion of the deal.
The share price later stood at 417.5 pence, up 8.13 percent from Wednesday.
In London currency deals on Thursday, the euro eased to $1.3147, down from $1.3152 late in New York on Wednesday.
"The ECB will be a key focus for the foreign exchange markets today given the expectation of a further rate cut or that quantitative easing could be introduced to combat falling inflation," said CurrenciesDirect dealer Phil McHugh.
"However, it is likely that the ECB will disappoint the markets today and hold fire. We should also be ready for some strong rhetoric from Mario Draghi and for him to open the door wider for QE."
The single currency was unchanged at 79.89 pence, while the pound dipped to $1.6456 from $1.6461.
The price of gold rose to $1,271 per ounce, down from $1,265.50 on Wednesday on the London Bullion Market.
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