European stocks drop sharply after Thursday's ECB rally; Dax down 1.59%

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European stocks drop sharply after Thursday's ECB rally; Dax down 1.59%
Credit: © Reuters. - European stocks opened sharply lower on Friday, pulling back from the previous session's strong gains posted after comments by the European Central Bank indicating the possibility for further easing measures.

During European morning trade, the EURO STOXX 50 plunged 1.63%, France’s CAC 40 plummeted 1.57%, while Germany’s DAX 30 lost 1.59%.

European equities strengthened broadly after the ECB indicated on Thursday that it could expand its quantitative easing program amid increased downside risks to its inflation outlook.

The ECB lowered its forecast for growth and inflation, citing oil prices and slowing growth in China.

The comments came after the ECB kept its benchmark interest rate at a record-low 0.05%, in line with the consensus expectation.

Financial stocks were broadly higher, as French lenders BNP Paribas (PARIS: BNPP ) and Societe Generale (PARIS: SOGN ) tumbled 1.34% and 1.36%, while Germany's Commerzbank (XETRA: CBKG ) and Deutsche Bank (XETRA: DBKGn ) plummeted 1.71% and 1.42%.

Among peripheral lenders, Italy's Intesa Sanpaolo (MILAN: ISP ) and Unicredit (MILAN: CRDI ) plunged 2.48% and 2.21% respectively, while Spanish banks BBVA (MADRID: BBVA ) and Banco Santander (MADRID: SAN ) lost 1.27% and 1.65%.

Elsewhere, Bayer AG (XETRA: BAYGN ) saw shares retreat 1.86% after the German pharmaceutical company announced plans for an initial public offering of Covestro AG in the fourth quarter.

In London, FTSE 100 tumbled 1.26%, weighed by losses in the financial sector.

Shares in Lloyds Banking (LONDON: LLOY ) retreated 1.26% and the Royal Bank of Scotland (LONDON: RBS ) plummeted 1.37%, while HSBC Holdings (LONDON: HSBA ) and Barclays (LONDON: BARC ) declined 1.45% and 1.67% respectively.

Mining stocks added to losses on the commodity-heavy index. Glencore (LONDON: GLEN ) and Randgold Resources (LONDON: RRS ) dropped 0.69% and 0.77% respectively, while Rio Tinto (LONDON: RIO ) declined 0.98% and Bhp Billiton (LONDON: BLT ) lost 1.04%.

On the upside, Bwin.Party Digital Entertainment (LONDON: BPTY ) rallied 1.98% after the gambling company agreed to an offer from GVC Holdings Plc.

In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a 0.81% decline, S&P 500 futures signaled a 0.69% drop, while the Nasdaq 100 futures indicated a 0.87% slide.

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