European stocks dropped Tuesday, feeling the weight of a rising euro, as profit warnings and merger concerns pulled regional equities toward their lowest level in nearly two weeks.
The Stoxx Europe 600 SXXP, -0.42% fell 0.6% to 386.65, on track for its lowest close since June 15, FactSet data showed. Only the basic materials and oil and gas sectors moved higher. Decliners were led by telecom and technology stocks.
The pan-European index lost as much as 0.9% as the euro EURUSD, +0.6618% jumped above $1.1250, its highest level in nearly two weeks. The shared currency gained after European Central Bank President Mario Draghi said in a speech in Portugal that “a considerable degree” of stimulus is needed in the eurozone, a step back from the stimulus levels signaled in earlier speeches.
“Mr. Draghi continues to argue that his policies are behind the overall improvement in eurozone economies, but it was his shift of emphasis from ‘very substantial’ to ‘considerable’ where stimulus was concerned that really got everyone talking,” wrote Chris Beauchamp, IG’s chief market analyst.
A stronger euro can hurt shares of European exporters as it can make their products more expensive for clients overseas to purchase.
In Frankfurt, the export-heavy DAX 30 DAX, -0.29% was down 0.6% at 12,699.19.
Carney, Yellen to speak: Central bankers are in focus Tuesday, with Bank of England Governor Mark Carney set to speak about the bank’s Financial Stability Report at 6 a.m. Eastern Time. In London, Federal Reserve Chairwoman Janet Yellen will speak at 1 p.m. Eastern time.
Germany’s DAX 30 DAX, -0.29% gave up 0.7% to 12,685.33.
Stock movers: Stada Arzneimittel AG SAZ, +0.65% slid 4.9% after German drug maker said a takeover plan by financial investors Bain Capital and Cinven had fallen through. Shareholders didn’t tender enough of the shares required for the offer to go through.
Deutsche Telekom AG DTE, -1.70% was down 1.9% following reports that Sprint Corp. S, -0.50% may hold off on talks about a merger with T-Mobile, a unit of Deutsche Telekom’s. Sprint is trying to form a wireless partnership with Comcast CMCSA, +0.23% and Charter Communications CHTR, +0.56%
Schaeffler AG shares SHA, -10.36% tanked 11% after the German auto parts supplier cut its profit forecast for 2017.
Bankia SA BKIA, +3.72% leapt 4.3% following a deal to purchase fellow nationalized Spanish lender BMN.