(MENAFN- The Peninsula) Europe's stock markets plunged yesterday after investors appeared disappointed at the limited extent of the European Central Bank's plans to launch its contested purchases programmes.
The ECB as expected left its key interest rates unchanged, holding its main "refinancing" rate steady at 0.05 percent after cutting it last month.
And ECB chief Mario Draghi announced that the bank will start covered bond and asset-backed security (ABS) purchases, aimed at injecting cash into the stagnant eurozone economy.
But Europe's main stock markets sank on the news, with London's benchmark FTSE 100 index falling 1.69 percent to end the day at 6,446.39 points.
In Paris, the CAC 40 tumbled 2.81 percent to 4,242.67 points, while Frankfurt's DAX index lost 1.99 percent to 9,195.68 points.
Other European exchanges also plunged with Madrid down 3.12 percent to 10,418.1 points, and in Milan the market lost 3.92 percent to end at 19,894 points.
The ECB "gave us further details on the ABS and covered bond purchase programmes, but no size," said analyst Elga Bartsch at Morgan Stanley. "The ECB doesn't seem to be inching closer to broad-based sovereign debt buying."
The euro edged up to $1.2659 from $1.2624 late on Wednesday, having struck a two-year low of $1.2571 earlier this week.
France obtained a record low interest rate of 1.23 percent for an issue of 10-year bonds. Spain also placed long-term and medium-term debt at low rates.
On Wall Street, US stocks were little changed in early trade, stabilising after the prior day's sell-off, following a solid report on US jobless claims. About 35 minutes into trade, the Dow Jones Industrial Average was down 0.12 percent to 16,784.38.
The broad-based S&P 500 slipped 0.02 percent to 1,945.75, while the tech-rich Nasdaq Composite Index gained 0.11 percent to 4,426.77.
Dangerously low eurozone inflation had sparked intense speculation that the ECB could inject more stimulus to fight the threat of deflation - a vicious downward spiral of falling prices and demand which central banks have great difficulty reversing.
Markets had not been convinced that the ECB would take action even though "the eurozone economy is on its knees," said Valutrades analyst Joao Monteiro.
ECB President Mario Draghi told a news conference in Naples, where the central bank's meeting was held, that the bank will "start purchasing covered bonds and asset-backed securities in the fourth quarter of 2014, starting with covered bonds in the second half of October."
New data showed this week that eurozone inflation slowed in September to 0.3 percent, the lowest level for nearly five years. That, together with weak eurozone manufacturing data, had turned up the pressure for more ECB action.
Draghi also stressed that the eurozone countries must push the legislation and implementation of structural reforms to steer the single currency bloc back to growth.
In Moscow, Russian President Vladimir Putin made light at an investor forum of the doom-and-gloom assessment of Russia's economy facing an "explosive" combination of high inflation and low growth as well as a raft of Western sanctions over its role in the Ukraine crisis. Russia's RTS stock index plunged below 1,100 points yesterday for the first time since March.
Meanwhile airline stocks were under pressure again "in the wake of news that the Ebola virus continues to spread," said Trustnet Direct analyst Tony Cross. At the close International Airlines Group, owner of British Airways and Iberia, saw its share price fall 2.60 percent to 347.90 pence, and in Frankfurt, Lufthansa stock sank 2.75 percent to 11.84 euros.
Asian markets fell heavily on concerns about the global economy, with Tokyo tumbling 2.61 percent, Seoul losing 0.77 percent and Sydney shedding 0.68 percent. Hong Kong, Shanghai and Mumbai were closed for public holidays.
In foreign exchange deals, the dollar fell against the Japanese currency, one day after breaking 110 yen for the first time in six years. It stood at 108.21 yen in London yesterday, against 108.91 yen late Wednesday. The euro firmed to 78.50 pence from 77.99 pence late on Wednesday. The pound fell to $1.6125 from $1.6184.
On the London Bullion Market, the price of gold slid to $1,211.75 an ounce from $1,216.50.
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