(MENAFN- AFP) Eurozone stock markets extended losses Thursday on renewed calls from European Central Bank chief Mario Draghi for politicians to help stimulate the single currency bloc's sluggish economy, analysts said.
Draghi's comments to the Brussels Economic Forum come a day after the ECB unleashed a radical stimulus programme by buying bonds issued by companies in a bid to also kickstart eurozone inflation.
"There are many understandable political reasons to delay structural reform, but there are few good economic ones," Draghi said in his speech.
"The cost of delay is simply too high," he said, repeating the ECB's frequent call that "fiscal policy should work with, not against, monetary policy".
Sentiment on markets was downbeat also on unrest over the future of the European Union, with just two weeks before Britain's knife-edge referendum on EU membership, traders said.
Around 1100 GMT, London's benchmark FTSE 100 index was down 0.8 percent compared with Wednesday's close.
In the eurozone, Frankfurt's DAX 30 index slid 1.2 percent and the Paris CAC 40 shed 0.8 percent in value.
"Draghi's warning that governments are not doing enough to stimulate growth feeds into the belief that the recovery is going to be extremely slow and weak," Craig Erlam, senior market analyst at OANDA trading group, told AFP.
"The other is that in making this speech, Draghi appears to be suggesting that the ECB is nearing the limit of what it can do, which may indicate that the central bank won't be as aggressive with future stimulus as they have in the past."
- British bond low -
In foreign exchange, the euro was down against the dollar, while the rate on British 10-year government bonds hit a new all-time low point at 1.220 percent, replacing the previous record of 1.226 percent in February.
"The ECB's bond-buying programme is at full throttle, which has helped to push benchmark government bond yields to record lows with the German 10-year being just above zero and UK's equivalent dropping to a fresh low today," said Fawad Razaqzada, market analyst at City Index.
Jasper Lawler, an analyst at CMC Markets, said a warning from US billionaire investor George Soros in the Wall Street Journal on Britain's EU future ahead of the June 23 referendum was heaping further pressure on stocks.
"Markets were backtracking on Thursday after two high-profile warnings about the future of the European economy from the ECB's Mario Draghi and renowned investor George Soros," he said in a note to clients.
"Mario Draghi warned of lasting damage without structural reforms whilst George Soros warned that a Brexit vote would cause the dissolution of the European Union.
"Neither Draghi nor Soros believe in imminent disaster but the comments are a sober reminder of the risks to health of the European economy," Lawler added.
In Asia, Japanese stocks retreated on the back of a stronger yen, as traders consider the prospect of low US interest rates until the end of the year, while easing producer inflation in China offered hope for the world's number two economy.
There was another rise in US equities Wednesday, which put the S&P 500 within spitting distance of a record high.
The chances of a mid-year Fed rate hike have been crushed by data showing the US economy added a quarter of the jobs expected in May. The central bank meets next week but dealers do not forecast a rise until September at the earliest.
- Key figures around 1100 GMT -
London - FTSE 100: DOWN 0.8 percent at 6,250.50
Frankfurt - DAX 30: DOWN 1.2 percent at 10,096.00
Paris - CAC 40: DOWN 0.8 percent at 4,414.30
EURO STOXX 50: DOWN 0.8 percent at 2,996.50
Tokyo - Nikkei 225: DOWN 1.0 percent at 16,668.41 (close)
Shanghai - Composite: Closed for a holiday
Hong Kong - Hang Seng: Closed for a holiday
New York - Dow: UP 0.4 percent at 18,005.05 (close)
Euro/dollar: DOWN at $1.1347 from $1.1393 late Wednesday
Dollar/yen: DOWN at 106.45 yen from 106.99 yen
Pound/dollar: DOWN at $1.4464 from $1.4503
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